Comment on Basics on Options Shorting/Writing

Rohit commented on 25 Nov 2015, 03:17 AM

HI Nithin,

I have a question regarding writing call options on stocks.

Say, I write a call option for stock ABC @ strike price 50 and the spot price is 45. This transaction is done at the beginning of the month.

Now, Imagine on the last Thursday of the month, the spot price is 55 and the call option I sold is in the money.

What will happen if I dont square off my position before expiry and no one exercises the call option either?

Will the exchange square off my position automatically or will it be exercised automatically?

Or will it expire worthless?

Regards
Rohit

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