India.shares Can a call option result into delivery of shares?

Question

India.Shares. Can call option can be exercised for delivery?

Suppose I have bought a call option. By exercising call option what happens? Tell me if call option can be exercised for taking delivery of shares, whether it happens automatically on expiry date.

Answer 1

No a call option cannot result in delivery of shares to you; for purchase of shares you would have to buy them directly from the stock exchange through your broker.

In India, we have the American options, which means that you can exercise your option anytime during the pendency of the contract month.  If the option is in the money then your profit would be the difference between the closing price of the stock (in the cash market or its spot rate) and the strike price of your call option contract.  In case the current market price is below your call option strike price, then it is out of the money and in a loss; then the option cannot be exercised and expires automatically on the last Thursday of the month.

Akash

http://www.narachinvestment.com

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You would appreciate that the website I refer to is academic in nature.  Academically, what is stated on the website is correct.

When it comes to real time transactions in the equity, futures and options markets they are not linked.  However, the futures and options markets are dependent on the equity market for the spot rate; which would be the closing price of the stock in question on the date of exercising the options contract whether "Call" or "Put".

You would appreciate that to link all these three part of the stock market would require a very extensive platform with additional financial resources allocation towards maintenance, monitoring, servillence and training.  Further, it would increase the complexity of the stock market well beyond the comprehension of the ordinary person who buys and sells shares more as a investment instrument than as a full time career.

Akash

http://www.narachinvestment.com

Answer 2

In INDIA, Call options on stocks are "American" style. As a result you can exercise your options anytime you wish before the expiry date or on expiry date. If you do not, then the options are settled automatically on the expiry of the trading day of the expiry date.

In INDIA, you can not settle / exercise options by delivery of shares. The options are settled in "CASH" i.e. the accounts of beneficieries will be credited eqivalent of cash difference.

Answer 3

i dont know if india has european or american style options (or something else) if european style options, can only be exercised on the day of expirery. if american style , you can exercise them any time during the life of the option.if you exercise the option you will take delivery of the shares at the strike price of the option.my option broker exercises every option that expires in the money,unless you instruct them not to.you should ask your broker whether your options would be exercised automatically,or would you have to instruct them to exercise it.

   YES.if you exercise your call option,you will take delivery of the shares.

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with all respect to the person that answered after me,this extract is from the site that he recomended.

Call Options:  The call options give the taker (or buyer) the right, but not the obligation, to buy the underlying stocks (or shares) at a predetermined price, on or before a determined date.

Answer 4

No it can not