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Squaring Off an Option

It is selling an Option of the same underlying, expiration date and strike price which you have bought.

Squaring off your position mean selling a Call or Put option of the same underlying, expiration date and strike price that you have bought. Suppose you have purchased 1 lot of TCS Call of strike price 3000 for May 31 expiry then to square off you need to sell 1 lot of TCS Call of strike price 3000 for May 31. You will receive the premium for selling the Option. Your profit or loss from the entire trade will be the net of premium paid when you bought the Option and premium received when you sold the Option will be your profit or loss.

Profit/Loss=  Premium Paid-Premium Received

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