Why was the settlement price 0 for the option position, although the Last Traded Price (LTP) is not 0?
The settlement price is derived from the weighted average price of all trades done during the last 30 minutes on the underlying instrument on the cash market. The LTP cannot be zero. The settlement price will be zero if the option's strike price is Out-of-The-Money (OTM), regardless of the LTP being 0.50 or 0.1.
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