Comment on Basics on Options Shorting/Writing

Naven commented on 28 Mar 2015, 08:51 PM

hi Nithin,

I am new in option writing but great fan of zerodha, the way you are responding queries here, my query is :–
How Call Sell Process works in Option derivative case ? in given example , Suppose I take 1 lot of 1000 shares of X Stock at 5 Rs Premium , Strike Rate is 520 and Stock current price is 510 (please note I took this from Call Sell Lot), after 4 days what would happen If Stock goes to 512 , premium is 4 Rs (due to Time Decay) can I square off this transaction or not?If yes then how much profitable amount would be credited into my account (calculation please)

· My Second query is if Stock goes to 530 and Stock premium is 0.5 paise on expiry date then what would be the total benefit/loss here

· Third Query is if I do nothing till expiry and stock is below my strike price will i get the entire premium if yes then when it would be credited same day when I sold it or after I am closing the exercise means expiry date.

my main question is mainly Stock premium reduce after few days considering this call seller will always be in profit then why we normally say he might get unlimited losses


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