Comment on Physical delivery of stock F&O & their risksĀ 

Anonymous commented on 07 Nov 2022, 07:57 PM

Thank you sir for detailed explanation, I was pointed to this article through ” What are the risks associated with the physical delivery of stock Futures & Options (F&O)” link shared as advice on one of the query I raised with Zerodha. On expiry day I had carry forwarded short-strangle options position for equity stock at a strike prices which were both out side daily circuit limit on upper side (for short CE) and lower side (for short PE). On expiry day, during trading hrs, additional margin of 40% of the contract value or SPAN + Exposure (whichever is higher) was blocked. The response from Zerodha was that this is blocked due to “our risk measures that are involved with the physical delivery”.
Sir, my question to you is, on expiry day the strike price at which I had short CE/PE positions are outside daily circuit limit of stock, there is no way my position would ever endup as ITM; in that case what is risk broker is seeing requiring to block additional margin during trading hrs (note: this amount was ~Rs. 4.29 blocked, I could have taken advantage of expiry day to make some more trades using this margin but I couldn’t do so)

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