Comment on Basics on Options Shorting/Writing
Hi Nithin,
As a part of my hedging strategy….i am planning to Short Nifty call option (Strike 6800) of July contract @ Rs. 800/-, THIS IS AN ILLIQUID OPTION…There are buyers available at this prices (Rs. 800 is the bid price),
My question is regarding the M2M for illiquid options,
What if liquidity for these options completely dires up? so that there are no trades during the day, no LTP, no Bid or Ask….etc..
How is the M2M in such a case determined??
While i had short the option @ Rs. 800/- but when liquidity completely dries up, what rate would the exchange take to make M2M adjustments
Thanks,
Yash J