If we sell a Put option & dont get a seller to buy what is the situation
- Thread starter ssrinivasa
- Start date
To Start With, I Shall Assume The Following:
1) It Is A Stock Option
2) It Is Illiquid Stock Option
3) It Is July Series
Assuming All Of The Above If You Haven't Been Successful At Squaring Up Your Option Trade Before 3:30 PM On 31st July, You Will Have Lost All The Money That You Spent Buying The Option.
Hope The Above Answers Your Query
Happy & safe Trading
SavantGarde
1) It Is A Stock Option
2) It Is Illiquid Stock Option
3) It Is July Series
Assuming All Of The Above If You Haven't Been Successful At Squaring Up Your Option Trade Before 3:30 PM On 31st July, You Will Have Lost All The Money That You Spent Buying The Option.
Hope The Above Answers Your Query
Happy & safe Trading
SavantGarde
You did not find a buyer at the price of premium that you have quoted. Moreover, you have not monitored time to time, the daily addition/deletion of Open Interest of the contract. You have failed to notice that the number of buyers were reducing and premium value they had quoted was very smaller than the value you had quoted so long. By this time, the specific contract has turned 'Illequid" and you are holding it till now because there is no buyer coming forward to buy. The only option available to you - you have to quit before expiry date i.e., 31-Jul-08. The Exchange has assigned a premium and you have to square up your position at that premium value. Just open your 'Portfolio details' (as in F&O Section of icicidirect.com) and you will find the exchange fixed premium value. Get it.
In future, whereever you select to buy any CALL/PUT option, ensure that Open Interest position is comfortable, monitor the daily addition/deletion to OI till you hold. Any alarming reduction in OI you take appropriate action without delay.
In future, whereever you select to buy any CALL/PUT option, ensure that Open Interest position is comfortable, monitor the daily addition/deletion to OI till you hold. Any alarming reduction in OI you take appropriate action without delay.
This is the lesson when buying OTM options.
They are tempting because the premium is low. But we often forget that premium is low for certain reason. Other players in the market are not blind to this oppotunity.
Due to illiquid nature of them, they need to be watched closely for the movement of the price of underlying. If the option goes OTM by 2 or 3 strikes, then it almost becomes illiquid. If monitored correctly, then you can rollup / rolldown the option with the movement of underlying. Bottomline, when playing in OTM options, do not allow them to go deep OTM.
Happy Trading
They are tempting because the premium is low. But we often forget that premium is low for certain reason. Other players in the market are not blind to this oppotunity.
Due to illiquid nature of them, they need to be watched closely for the movement of the price of underlying. If the option goes OTM by 2 or 3 strikes, then it almost becomes illiquid. If monitored correctly, then you can rollup / rolldown the option with the movement of underlying. Bottomline, when playing in OTM options, do not allow them to go deep OTM.
Happy Trading