Module 5   Introduction to Options Trading (Video Series)Chapter 12

Physical settlement of futures and options

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12.1 – Physical settlement of Stock Options

Until 2018, all F&O contracts were cash-settled. Meaning, on expiry, there was no need to deliver or take delivery of the underlying shares of the contract. But in 2018, SEBI made physical delivery mandatory. We will learn more in this video.

We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.


There are no key takeaways in this chapter 🙂

 

5 comments

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  1. Ramachandran says:

    I purchased x shares 1000 nos.( equivalent of one lot ) for Rs.1000 per share in equity segment.
    I sell call option at strike price 1050 for premium of Rs.80.
    During contract expiry the underlying value becomes Rs.1200.

    Kindly clarify what will be my profit / loss.
    Also clarify whether brokerage charges will be charged for selling as well as for equity delivery.
    Also kindly clarify whether entire margin paid will be re-credited into my trading account or any part only.
    Thanks.

  2. Sagar says:

    Hello ,

    By mistake I sold CE (which is illiquid) instead of PE of stock but to hedge I bought future of stock same expiry .

    Real Life example 🙂 :
    Aarti Ind was at 750 at starting of month , I want to sell it’s Aug PE but by mistake sold it’s Aug CE at 50 [Contact is illiquid only single contact ]
    To hedge I bought Aarti Aug Future at 749.50
    But on the day of expiry Aarti trading at 799

    I do have enough margin available till end but just like to know is what will be extra charges after 0.1% of STT of net delivery values in my case it will be 799 X 850 + 700 * 800 ‘s 0.1% if I am not wrong

  3. Dipak says:

    I had purchased 4 lot for futures for about 4 laks,but i didn’t exist on the last day.what happens in this case.

    • Karthik Rangappa says:

      The futures contract will be settled physically if its a stock future, cash-settled if its index futures.

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