I take sell in banknifty ITM option with strike price 42000 call option at 1400 Rs. It is now at 1100 Rs. so i have profit.
on expiry day end if profit remains like this, shud i buy it back or shud i let it get auto exercise…which is more better from brokerage cost point of view?
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Index options are cash-settled, if you do not square-off the position on expiry, ITM positions are settled at the intrinsic value by the exchange. Also, as the position is ITM, the brokerage will be applicable.
The additional STT of 0.125% is applicable only for Long ITM option positions, since you’re holding a short position, the STT is already paid and it’ll not be applicable.
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@ShubhS9 quick question on the same lines…
In the above example i.e 1400 ITM became 1100 ITM on expiry. So, the profit is 300. I want to book the profit. Now assume the liquidity is very poor and only few sellers are available with a bid price of 1200.
So, If I leave the trade for broker to close, will my trade get executed at 1100 or 1200. ??
Thanks in advance.
@Santhosh9 It will be as per BankNifty close price on the expiry day, no matter what the LTP of the option contract was. So, assuming BankNifty closed at 43100 on the expiry day, the IV will be Rs 1100. So you will have to pay back Rs 1100 (+ the contract note charges as usual).