How can I exercise my options at expiry, and how is P&L calculated?
In the Indian derivatives market, all in-the-money (ITM) options are automatically exercised by the exchange upon expiry. You don’t need to manually place a request unless the contract is not auto-exercisable (which is rare).
How Are Options Exercised?
- Auto-Exercise: If your option is ITM at expiry, the exchange will exercise it automatically.
- Out-of-the-money (OTM) options expire worthless.
- Exercise applies to physically settled stock options or cash-settled index options depending on the contract type.
How Is P&L Calculated?
Your Profit or Loss is computed using the following formula:
For Call Options:
P&L = (Settlement Price – Strike Price – Premium Paid) × Lot Size
For Put Options:
P&L = (Strike Price – Settlement Price – Premium Paid) × Lot Size
Example:
You bought a call option with:
- Strike price: ₹90
- Premium paid: ₹3
- Settlement price (on expiry): ₹100
Per share profit = ₹100 – ₹90 – ₹3 = ₹7
Multiply by lot size (e.g., 100 shares) to get total P&L = ₹700 (before charges)
What if...
| Scenario | Outcome |
|---|
| Option is ITM and you hold till expiry | It will be auto-exercised and settled |
| Option is OTM | It expires worthless; no exercise or P&L |
| You sell the option before expiry | P&L depends on the premium difference, not settlement price |
Important: Statutory charges, STT, and other levies will impact your final payout. Always check your contract note post-expiry.
Last updated: 27 Jun 2025
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