Comment on STT Trap - Options Expiry - NSE BSE MCX-SX
commented on
10 Dec 2013, 12:32 PM
Rajesh, My bad 🙂 , didn’t see your question correctly, I thought you mentioned option buy..
If you sell option, when you sell Rs 110 is credited to you for the option shorted. If Nifty expires at 6225, Rs 25 is taken back from the Rs 110, so you making a net profit of Rs 85.
There is no worry of paying extra STT for a short option position, because even if the option expires in the money, you don’t have to pay any additional STT.
Is it a good idea to short options?
The odds of winning go up significantly when you short options, compared to buying options. But what has to be remembered with shorting options is that the profits are limited, whereas the risk is unlimited.
Hopefully this helps,
cheers,