InvestorQ : What is a better strategy for options on expiry; should I square up or should I just leave to expiry? What is more profitable for me?
Debbie Mascarenhas made post

What is a better strategy for options on expiry; should I square up or should I just leave to expiry? What is more profitable for me?

Answer
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Crowny Pinto answered.
2 years ago


You can do either but remember there is a huge difference in terms of the cost of STT. If you square off the option then the STT will be charged at just 0.05% of the premium value. If you exercise the call option or even if you leave it to expiry and if it is an ITM option then it will be treated as equity and STT will be imposed at 0.125% of the actual value. The difference will be huge. It is always better to square off your options on the expiry day rather than leaving it to expiry. Also, in case of OTM options, you are going to lose the entire money. At least if you think you can recover some part of your costs, you can at least make some progress towards reducing your overall losses.