If someone buys an ITM deep CE in style and we see that due to the depth of ITM, the difference between buyer and seller is huge due to lack of liquidity.
Now, at the expiry if we get out of CE by selling, we may lose money because the buyer may be Rs 100 less.
Therefore, we are not leaving the deep ITM CE purchase process.
How will that exchange be settled then? Who will pay me the equivalent of the intrinsic value?
In the settlement process, can I still lose 100 rupees because the broker may want me 100 rupees after the settlement due to lack of liquidity and pay the exchange for the cash settlement?
Please shed more light here if this cash settlement can also become dangerous along the lines of physical delivery of ITM stock options?