Comment on STT Trap - Options Expiry - NSE BSE MCX-SX
commented on
14 Sep 2015, 07:57 AM
Jayesh,
When you short options or trade futures using the pledged margin, it is best to keep some extra cash for any MTM losses.
3/5. If the call moves ITM, the margin required will go up. If you don’t have enough money in your account to meet this increased limit then the position can get squared off. But if you are pledging 250 shares and shorting only 250 call options, there is no need to worry about it as you will have a lot of free margin. If on expiry the call option closes more than the price at which you have shorted, that much of loss will be debited to your account. If it is lower than what you have shorted, the margin frees up and you would be still in profit. No need to worry about any extra STT or charges.
4. Yep nothing to do, no more charges. When you short options, ITM/OTM/ATM, STT is already paid while shorting, so no extra charges.
4.