Comment on Option Strategy - Zerodha Trader

Pranav J commented on 14 Aug 2015, 11:30 AM

Hey nithin ,have a few qus,
1)There are two types of options available in the Indian market — European and American. Index options, such as the nifty and sensex, are European-style. This means that they can be exercised only on the maturity of the option.

2)How soon can I sell the stock after I exercise a call option? and how to do it , do I PUT a new contract or excersicing means I bought it and sold it as well.I’m confused? please elaborate.

3)If you exercise an option, the settlement occurs in three business days, just as if you bought or sold stock on an exchange. For example, if you exercised a call and simultaneously sold the equivalent shares of stock, those transactions offset each other. Assuming the option is in-the-money, there is no need to post margin for offsetting transactions. As always, you will want to check with your brokerage firm to ensure you understand their policies.

4)Consider a Put 300 was bought ,if at the time of expiry, market price of Reliance is Rs 320/ – , the buyer of the Put option will choose not to exercise his option to sell. In this case the investor loses the premium paid (i.e Rs 25*100 = 2500) which shall be the profit earned by the seller of the Put option.So, if cmp was 350 would the buyer still lose only the premium if yes, who does this remaining loss of (350-300) rest with. i.e.(of Rs.50 per unit) * 100 = 5000rs.

Thanks in advance and great work with Pi.

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