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FYERSFYERS Team
Communications Team
Asked a question 10 months ago

What happens to the premium of At The Money Options on Expiry?

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It depends on where market is heading, 

If your strike price and market is heading in the same direction, then Premium won't be 0.05 but if you are far away from market it will become 0.05

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What happens to the premium of At The Money Options on Expiry?

As the spot can never close exactly at a option strike price, 2 scenarios arises for ATM. Whether it is on ITM side or OTM side.

If the ATM is closed on OTM Side, its value will be 0 or 0.05.

If the ATM is closed on ITM side, its value will be less than or equal to its Intrinsic value.

 

Eg: Spot at 38050. 

38100 CE will be 0.

38000 CE will be <= 50.

38000 PE will be 0.

38100 PE will be <= 50.

 

Same can be observed from the recent expiry. Screenshots attached 

 

Note: The Intrinsic value of ITM side ATM need not be equal to its Intrinsic value. Based on the LTP, it will be less than or equal to its Intrinsic value. But for sure the theta value will be ZERO in that all Options.

As i know about options, At The Money Option becomes 0 on expiry day because this option losses its total external value and it didn't have any internal value.

note :- any kind option can never become zero during market hours.

Naresh Janagam
Full-time Learner & Part-time trader

If it's out from the closing price, it will become zero. If its in, the premium proce is based on intrinsic value

The Premium will become Zero. 

Thanks.

Whatever be the strikes it will be settled at intrinsic value. If the underlying closes exactly at a strike price it wouldn't have any intrinsic value and becomes zero. 

IN ATM STRIKE ANY 1 ( CALL / PUT ) BECOMES 0.05   100% 

IT TS TOO MUCH VOLATILE IN ATM STRIKE PRICE IN LAST DAY OF EXPIRY

OPTION BUYER IT IS BENEFICIAL IF ANY TREND FORM IN MARKET FROM 2-30 PM TO 3-30 PM

OTHERWISE IF MARKET CONSOLIDATE AS ALWAYS OPTION SELLER WINS THE MATCH

MY LOGIN ID IS XP02131 NOW PAY ME 200 POINTS IN MY ACCOUNT 

ATM will have the spot price - strike price difference premium , and one of the ce or pe depending on what is slightly otm will be zero 

intrinsic value becomes almost zero.. can say expires worthless

It will become zero📉

When ATM options are in expiry day underling value is equal to strike price there is no theoretical value similarly there is no time value remain in result this options goes to zero this is the reasons most of options writers very active in expiry day of each options. 

Ankit Singh
Option Writing & Investments

ATMs upon expiry will either expire 0, or if the underlying asset has a weighted average price in the last 30 minutes of trading such that the strike becomes slightly ITM, whatever the difference comes out to be from the adjusted closing price, that will be the option contract's value. (Settled on cash basis for Index options and physically settled for Stock options.)