INTRINSIC LESS THAN EXPECTED - OPTIONS

[Vijay1]

Banknifty Expired at 24217 (10 AUG), hence 24300 PE become Put ITM, so the PUT ITM intrinsic value should be Strike price - Spot price ie 24300 - 24217 = 83, but it EXPIRED at 57?? Please explain

 

[Shiv12345]

Hi ... As far as I know, this has something to do with STT tax which is usually charged higher for all ITM on the day of expiry. Therefore, it is must to exit the ITM options before they expire (before 3:30 PM on expiry day). Also, because of the fact that traders are pretty much aware of this hefty STT on expiry days, hence it affects the total number of buyers and sellers in those particular ITM contracts and therefore we get to see changes in intrinsic values. A person once told me this thing long ago, I am sharing with you whatever I remember. Thanks.

Sent from my HTC Desire 728 dual sim using Tapatalk

 

[simplebuthard]

The information you are looking for, has been explained well here in these blog posts.

https://www.samco.in/knowledge-center/articles/stt-on-exercised-options-on-expiry-day/

https://zerodha.com/z-connect/queries/stock-and-fo-queries/stt-options-nse-bse-mcx-sx

 

[OPTIONSRIGHT]

The information you are looking for, has been explained well here in these blog posts.

https://www.samco.in/knowledge-center/articles/stt-on-exercised-options-on-expiry-day/

https://zerodha.com/z-connect/queries/stock-and-fo-queries/stt-options-nse-bse-mcx-sx

These are all far from the fact. Please read the following.

It is due to a wrong definition of 'Settlement Price', ITM Options on expiry are being charged a whopping STT. So, the option holders are dumping their options at a discount.

This thread explains the mistake, and as per NSE's settlement price for ITM Options.

How to get back STT paid on ITM Options on Expiry, probably with a Booty!

If NSE corrects the settlement price to the correct settlement price, then everyone would claim the wrong STT charged, and this could be of the order of Rs.20,000 Crores.

Unfortunately, representations have been made on the wrong points.

 

[simplebuthard]

Optionsright! Sorry. You have understood wrong.

I recommend you to stop wasting your time on this.

Seems like you lost a lot of money by not squaring it off your ITM options.

Better luck next time.

 

[OPTIONSRIGHT]

Optionsright! Sorry. You have understood wrong.

I recommend you to stop wasting your time on this.

Seems like you lost a lot of money by not squaring it off your ITM options.

Better luck next time.

Do not make arbitrary statements. I have given the NSE definition of Settlement Price from NSE website.

Read and understand before writing. Here the Settlement price on

Options Contracts on Index and Individual Securities

Final Exercise Settlement

Closing Price of such underlying security (or index) on the last trading day of the options contract.

So, STT is charged on this settlement price, and not the actual settlement price. But the options contract is settled as per regular definition of Options contract!

Now that I have explained everything clearly, I should return the favor. What intrigues me is whether you have any ulterior motive to make arbitrary statements.

 

[simplebuthard]

Yes, please again go through the same screenshot shared by you,

it clearly says,

"closing price of such underlying security or index"

what that means??

it is not saying closing price of option premium value,

it is clearly saying closing price of such underlying security (stocks) or index (Nifty, Banknifty etc).

Now say what is underlying security for Nifty 10000 CE? underlying security is Nifty50 spot value. Means 9710 for Friday.

what is underlying security for banknifty options??? It is banknifty spot value 23900.

Do not make arbitrary statements. I have given the NSE definition of Settlement Price from NSE website.


View attachment 21835

Read and understand before writing. Here the Settlement price on

Options Contracts on Index and Individual Securities

Final Exercise Settlement

Closing Price of such underlying security (or index) on the last trading day of the options contract.

So, STT is charged on this settlement price, and not the actual settlement price. But the options contract is settled as per regular definition of Options contract!

Now that I have explained everything clearly, I should return the favor. What intrigues me is whether you have any ulterior motive to make arbitrary statements.

 

[OPTIONSRIGHT]

Even experienced traders find it difficult to understand.

Good you had come this far. A little more thinking would make it clear!

 

[toocool]

Yes, please again go through the same screenshot shared by you,

it clearly says,

"closing price of such underlying security or index"

what that means??

it is not saying closing price of option premium value,

it is clearly saying closing price of such underlying security (stocks) or index (Nifty, Banknifty etc).

Now say what is underlying security for Nifty 10000 CE? underlying security is Nifty50 spot value. Means 9710 for Friday.

what is underlying security for banknifty options??? It is banknifty spot value 23900.

People dumping is all fine

But after close where should be the closing price of ITM OPTION?

check nse site and tell us........... Will you?

And then explain everything again............. Do you have the guts?

 

[simplebuthard]

People dumping is all fine

But after close where should be the closing price of ITM OPTION?

check nse site and tell us........... Will you?

And then explain everything again............. Do you have the guts?

Right questions can be answered. Wrong questions can't be answered because question is wrong and baseless.