Why did the option position have a settlement price of zero even though its Last Traded Price wasn’t zero?

This can happen due to the difference between LTP and settlement price.

• The LTP (Last Traded Price) is simply the last price at which the option contract was traded. It reflects recent market activity but doesn’t determine the final expiry value of the option .
• The settlement price is used to calculate profit and loss for the option at expiry., however, is based on the intrinsic value of the option at expiry. It is calculated from the weighted average price of the underlying stock/index during the last 30 minutes of trading on the expiry day, If an option expires out-of-the-money (OTM), its intrinsic value is zero, and hence the settlement price is zero, even if the LTP on the exchange was not zero before expiry.

So why is the settlement price 0?

The settlement price will be zero if the option expires Out-of-The-Money (OTM)—even if it was trading at a small LTP like ₹0.10 or ₹0.50.

Here’s how that works:

• Call Option: Expires OTM if the underlying’s closing price is below the strike price.
• Put Option: Expires OTM if the underlying’s closing price is above the strike price.

In both cases, the option has no intrinsic value, so its settlement price becomes ₹0—regardless of what it was last traded for.

Example:

Let’s say you hold a Call Option with a strike price of ₹1,000, and the LTP is ₹0.25. If the underlying stock closes at ₹998, the option is OTM, so the settlement price will be ₹0, even though it traded at ₹0.25 just before expiry.