Comment on Policy on settlement of compulsory delivery derivative contracts

Hi Zerodha, few queries:

1. My understanding is that you will automatically square off only in-the-money options IF AND ONLY IF the client does NOT have sufficient cash/stock for delivery, is this correct? i.e. out-of-the-money options will not be touched and can expire normally?

2. Under what circumstances is the 0.5% brokerage charged? Suppose a short call position is in-the-money and the client himself buys back the option and sells the stock on expiry day, normal brokerage applies, correct?

I understand physical delivery is new to all of us and you want to minimize your brokerage risk. So answering these queries would be very helpful to clients who use options actually for hedging, and not speculation.

Thanks!

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