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

Faisal commented on 11 Mar 2020, 04:44 PM

1. If you leave it to expiry, your short PE position will get physically settled(as long as you maintain the increased margins) and you will receive the stocks in your account. Essentially, you will be buying the stock at the strike price(30). Your P&L will be Premium received minus Intrinsic value.

2. A. ITM Sell position PE- Yes, the shares are credited to your account.
B. ITM Call position PE – You need to hold these shares in your demat account on expiry day. If you don’t, this will lead to short delivery and the shares will be bought in the auction session and settled to the exchange. Auction penalty will apply which could be upto 20% of the contract value.
C. ITM Sell position CE- Same as point B
D. ITM Call position CE- Same as point A

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