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Covering out of money options at expiration

Discussion in 'Technical Analysis' started by kaisarimam96, Feb 24, 2014.

  1. kaisarimam96

    kaisarimam96 Member

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    Dear Shabbir,

    Please advise is it mandatory to cover out of money options sold at NSE. For example i sold Nifty 6300 call options on 5th Feb 14 now most probably it is going to expire out of money on 26th Feb 2014. Is it compulsory to cover the short trade as per rules of NSE.

    Best Regards
    Kaisar Imam
     
    kaisarimam96, Feb 24, 2014
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  2. sanjay_sansanwal

    sanjay_sansanwal Contributor

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    Not mandatory in any case out of money or in money, if you have written options as you have already paid STT, so it doesn’t matter you cover the options or hold till expiry to square off as there is no STT on the buying side.
     
    sanjay_sansanwal, Feb 24, 2014
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  3. kaisarimam96

    kaisarimam96 Member

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    Will Stock exchange levy any penalty if i do not cover Out of money or in the money options. I have little doubt if i do not cover in the money sold options how difference will be settled.

    Regards
    Kaisar Imam
     
    kaisarimam96, Feb 25, 2014
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  4. sanjay_sansanwal

    sanjay_sansanwal Contributor

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    No penalty in case of writing options out of money or in money.

    But if buy in money it is always recommended to cover before expiry, could be so many reason but as per me it is because of stt.
    Will let you know if got anything more.
     
    sanjay_sansanwal, Feb 26, 2014
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