Comment on Basics on Options Shorting/Writing

Sujatha commented on 29 Jun 2016, 10:39 AM

Hi.
Please consider this example. I have rounded the numbers for easier understanding. I got the margin from zerodha calculator.
I want to sell a call option at strike price of 400.
Span margin – 1,45,000
Exposure margin – 90,000
Total margin – 2,35,000
Premium receivable – 10,000.
Now assume the premium is Rs.10.(10×1000)
1.If by expiry the premium stays below 10, should I square off just let it be?
2.If by expiry the premium goes above 10, can I square of at say Rs.12 to book a loss?
3.If before expiry the premium drops to 2, can I square off to book Rs.8 profit?
4.Will my total margin get credited back automatically to my account when I Square of or dont square off on expiry?
Please explain.

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