Comment on Policy on settlement of compulsory delivery derivative contracts — Update Oct 2019

Venkat commented on 11 Mar 2020, 01:56 AM

Great job with all the queries above. My query is what exactly happens in the below scenario:

1. I have a sell PE position (Rs 10 premium SP say 30) in Yesbank which went deep ITM. Say on expiry I don’t see sellers and by now the premium is say Rs 50. The rule says premium loses value if not squared off and physical delivery happens. So now my query is will I get the benefits of premium decay i.e. to keep my Rs 10 premium at the time of physical delivery @ 30 or the premium paid is lost completely or a premium loss of (50-10) + physical delivery or physical delivery @ 30-10 or something else?

2. deliverables and receivables doubt in physical settlement … correct me if I’m wrong.

ITM Sell position PE – lot size shares will he credited to our account. +8800 CNC

ITM Call position PE – lot size shares will be sold and we’ll get that 1 day to square off and settle it i.e., it will become intraday position for that day.
-8800 MIS

ITM Sell position CE – same as ITM Call position PE above. -8800 MIS

ITM Call position CE – same as ITM Sell position PE. +8800 CNC

Hope the above is what you meant by physical delivery.
if not then could you please explain with an example of what I’ll see on my terminal after settlement process is complete.

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