Is Brokerage charged on Options Expiry
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Not knowing the answer to the above questions can cause a potential loss and hence the reason for writing this blog. I am assuming that all of you reading understand the basics of option trading. Many of us would have had the following 2 questions or faced similar scenarios at some point of our trading career.
The seeming anomaly in the price or the extra debit in the above scenarios is because of how STT Security Transaction Tax is considered for options that are exercised. Options are considered exercised if you hold buy positions in options till the end of expiry till brokerage on expired options 3. STT on normal option trades done on the exchange is charged at 0.
So, if you buy 1 lot of Nifty options at Rs and sell it at Rsyou have to pay 0. Usually the STT component while trading options is almost insignificant, in this example it is only Rs 3. Brokerage on expired options would mean more than 7 points of movement on Nifty options, that is how high the impact of STT could be.
Love playing poker, basketball, and guitar. How much STT will be charges. As mentioned in the article, since you are writing options i. Last trading price is What will happen to my Holding? Will it be sold by the exchange at last trading price and return the brokerage on expired options to my account?
I think the stock closed at Yes, it will automatically get exercised and you will get this Rs But you will have to pay that higher STT on it. You should brokerage on expired options your contract notes to see all the charges. Right now no buyer to sell the quantity. Do i get brokerage on expired options any amount in last date or i need to pay large STT. If the contract brokerage on expired options in the money there will be liquidity usually and we will lapse all in the money options where STT is more than the intrinsic value of the options.
Check this post for more. Right now i paid for the option value 0. Right now option value is 0. To keep it simple, I sold put option of Brokerage on expired options at strike price of for Settlement will be done based closing price of spot. You sold it at You make a loss of brokerage on expired options Thanks so much, Nithin, for explaining this. I was also confused about STT implications on sold options. Now I know brokerage on expired options I do not have to buy them back to square off the trade if I am getting to keep the premium.
Please clarify one more thing: What if I have to buy back the option to square off as the trade is going against me? What are the STT implications then? Thanks so much for doing a wonderful job of clarifying things! It will get settled at Rs But yes, brokerage on expired options will be forced to bear higher STT which is 0.
Until Government looks into this, Zerodha should help every one in implementing a code at 3: Yes Zerodha,You should square off on our behalf.
Its so demotivating that accidentally someone could not sqaure off for some reason so he will have to pay a higher STT. Please bring some new rule on you platform under options. I got one lot of nifty cal at in march last. This call was for may. It costed me 13, in the last March. As of today it was going too low so my stop loss triggered.
I got only profit. I should have exit two days earlier which was rs profit. But when I exit today they deducting 13, whole money as premium for option. Then why do they say for all trade it is make 20 or. So max 20 rs. Only should be deducted. Why this premium for options Plz help me to retrieve this. Bala, STT is charged by the government and not the broker.
Unfortunately, the way they charge STT for expired in the money option is not right. We are supporting this petition brokerage on expired options, so can you. Hi Punit, nothing like that happens. Usually people complaining about deductions is out of ignorance. This STT rule is set by the govt. You can check it out all here: On the other hand, this has nothing to do with the Exchange. Exchange merely implements Government Orders within the legal framework it is supposed to adhere to.
In India all options are cash settled and there is no actual exchange of delivery that takes place once it is exercised, only the cash difference is settled. What is a brokerage on expired options by the government though is that when they reduced the STT rates for delivery based trading from 0. If a thing which cannot be delivered, how it amounts to the transaction of that thing and the government is charging the tax on the amount of undeliverable thing.
Thia did not happen in the kingdom of Aurangazeb in 17th century. Thanks a lot for brokerage on expired options, can you please let us know. What will happen in case of out of the money call option in not exercised. Will be highly thankful for your help. Amit, The OTM options expire worthless. More than a mistake, brokerage on expired options seems ,the rules are bent in favour of the option writer. After all its the deep pockets that are writers in most cases.
STT brokerage on expired options levied on the settlement price. Settlement price of brokerage on expired options option is defined as the closing price of the underlying, which defies all logic. What will be STT? If you had bought nifty calls and nifty closed at No one is there to buy my calls as premium is at What happens at expiry.
I understood about STT I need to pay, but what will be my profit or loss? As there is no one to buy, do I end in loss? Arun all in the money options get exercised.
If you have calls and nifty closes expiry atyou will get back This will complete my understanding on Options trading. I really appreciate your response for each question of the customer.
Thanks Zerodha again and just fyi, I recovered my losses after becoming Zerodha customer which enabled me to do more trades.
Hi, In this contact what about STT? I am a house wife and I am doing option trading from last six months. Can u tell me how can i take my profit and loss statement.
PNL statement is available on our backoffice. Yes,ideally you will need to have this audited by a CA. Is STT applicable brokerage on expired options I buy back my previously sold call or put option and let it expire In-the-money? Sell Put or call option at SP: X for premium P. Buy that same option i. X for premium Q. At the time of expiry, options are In-the-money…. Meaning government is sure of STT income for all the in-the-money option contracts, right?
A sells options to Mr. B then at the time of sale, Mr.