Note: As of October 2019, our policy on compulsory physical delivery has changed. You can read the new policy here.
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Sir kindly update me all the rules and regulations if any changes in sebi rules. We are investing more ? on futures so we should not go into loss.
They sent me the following email.
We see that you have an open position in a contract with compulsory physical delivery. All F&O positions(including In the money long options) will attract a physical delivery margin of 50%(or SPAN + Exposure, whichever is higher) of the contract value for tomorrow.
Please ensure you have sufficient margins/stocks to avoid your position being squared off. Read our policy on compulsory physical delivery here.
I have three open positions. Unless I know which position is up for compulsory square off, I have no clue. I cannot reply to them because it is from no reply. Certainly they lack common sense.
Even I got the same message for a Call option.. I don’t understand does zerodha team have any sense or not . Why should I have enough stock to adjust a call option buy
Please tell me about those 46 stock
The above shares f&o position should be cut before 4 days of expiry as per new rule of SEBI
If you do not sell before 4 days of expiry Date then you will have to take physical delivery.
If you do not buy BUY 4
days before the short Position (Call-Put) before Expiry Date, your lot will go into the auction and the repercussions will be a huge penalty.
I am Holding 3 stock but i am not able to sell because of no buyer are there, kindly suggest what should i do.
I have cE of just dial which will expiry on 25 July can I hold on monday
I bought Rcom 5pe @ 0.05, I can’t able to sell as no buyers, I want to square off before expirys only, how can I close that position.???
Hi, can you please help me I have the same position
Why don’t you give time till Wednesday for the clients to square off or roll over?? If it is not done, you can compulsory square off on Thrursday
I am holding JP associate 20 CE and 22.5ce and ready to square off but trade not executed on Friday, please advise how to square off? I thought if I am in loss anyhow Zerodha will square off on expiry day, but due to this rule I don’t have that much money to have physical delivery, please advise and let me know if I didn’t maintain the amount in my trading account what will be the charge?
Tried to close my position but Still I am on position and now time 12:30pm Monday, what will happen? Even i am ok square off my position by Zerodha at any price.
I bought just dial Jul 600 CE then when sell this 600call for avoid any penalty?
If stock expired in otm then, I will not give physical delivery i.e. expired worthless…….hope I’m correct????
What about intraday trading
Any changes in rules
No…this is only for Delivery of F&O contracts. Not for intraday.
So, in Summary, it’s better to avoid delivery or carry forward the position taken today.
This rule is applicable for only 46compay F&O ??
Other companies option I can hold for 27jun
I am holding,, IBULHSGFIN
740ce and 500pe,, OTM call and put,, what will be penalty,, current stock price 635 arround,, please,,
Please give us time till closing on Monday being the first month. We will square off at an opportunity price and time. Otherwise you may square off anytime on Tuesday..
Monday closing time make sense!
Kindly provide us a list of such companies for which the order is to be implemented in the first phase. Regards
Yes..you should allow till eod monday or like other brokerages do so we have the liquidity.
I do have some far otm options …will they be also squared off?
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.
As I understood, the settlement will be done for In The Money Options. It is not applicable for Out Of The Money Options. Can you please confirm.
Which are the stock covered
Hi Vinod, there’s a link to an NSE circular with the list in the post.
Don’t you guys have enough smart system to show the exact trade details, in attached screenshot it’s showing I bought TCS at rate of 2474 and sold at 2205, share me my trade details, showing wrong information since last three weeks, tell me when I bought TCS at that price, it’s showing me loss of 67287 rupees, who is going to pay this. Solve this issue with immediate effect else I will knock consumer court for same. And how you guys can close the ticket without understanding of issue, worst customer service, nobody picks the call as well. -Nitish
If I sell liquidbees for the equivalent amount cash will be received in the account in 3 days. Will that be sufficient
Hi Anand, I’m afraid this wouldn’t be possible this month. We’d require you to have cash in your account to maintain the position. Since this is the first time this is happening, even we are trying to get clarity on the process.
Hi I got your email today telling to square off or will be delivered. This doesn’t make sense. You guys tell us to exit of or get ready to be delivered on Friday night and leaving no window for us to make decision. I think Zerodha service is becoming worse and I’m loosing my trust in you guys. I bought a call option expecting either to make profit or get it squared off by itself on the last Thursday of the month and suddenly this news. This is quite absurd and its not making any sense.
If I have a debit or credit spread i.e. One long call and short call of next strike price vice versa and if I let them expire, how it will be treated.?
My same question???
If both the positions expire ITM, it will be netted off on expiry(You will not need to be required to give or receive delivery). However till expiry, for the short position, you are required to maintain the necessary margins i.e. 30% of the contract value or SPAN + Exposure(whichever is higher)
what about STT how much will that be?
STT would be 0.1% of the exercised value, i.e., the contract value.
Good Day Ours Faithfully,
I buy call option,it can be square off automatically on expiryday or I can sell it
Goof Day Ours Faithfully,
I have call option of Jul rcom. How I sell or square off
I also have call option of RCOM 25 CE.
Out of money options (worthless ones) will not be eligible for physical delivery. So dont worry just let it expire worthless.
But be careful of one thing, what if RCOM suddenly jumps up on Thursday, and your option becomes In the money? Just be careful on expiry day and square off your option if you can. Otherwise if its worthless and cannot be squared off, no need to worry.
I’m assuming you have a buy position. If it remains out of the money on expiry, it will expire worthless.
Hi I bought RCOM 35 CE option and i cant able to sell. And now LTP is zero so it worthless right? And do we need pay any other charges for that ?
I have Oil India Put sold one ITM and Bought one OTM at different price. So will it be auto net off on expiry day or I need to square-off before expiry …. Please guide.
Hi ,if I have ,say KSCL,4 Lots and enough margin available in my Account even if I take 30% additional margin into account then Can I carry forward my position till expiry day not like this month Zerodha decided to auto Sq off on Monday post 12PM.
Yes, you can let the position expire and be physically settled, if you continue to maintain margins of at least 30% of the contract value.
Hi, Suppose I have Rcom Fut Short position and have sufficient margin to hold till expiry. If physical settlement happens, so how will its settlement process take place?
On Expiry day you should have shares in your demat to deliver as you are short in future, otherwise your position will be closed irrespective of margin in your account as it will result in auction settlement.
I have ifci 15pe position of current month, what will happen.
hi i use to trade bank nifty option weekly is this applicable to same or it is applicable to only monthly expiry
The above is applicable only on derivatives of stocks of those 46 companies. It is not applicable on index derivatives.
I HAVE A PUT OPTION SYNDIBANK 18 AUG PE @ CMP 1.1 WHICH I WANT TO SQUARE OFF . SYSTEM IS NOT SQUARING OFF AT CMP . HOW TO SQUARE OFF .PLEASE APPRISE
Since it is OTM, there aren’t any buyers. The contract will expire worthless.
I have bought
godregind19Jan540 CE – Current LTP is 0.05
syndibank19Jan45CE – Current LTP is 0.05
relcapital19Jan280CE – Current LTP is 0.05
dishtv19Jan30CE – Current LTP is 0.05
and I just sold the ulb19Jan1500CE at 0.05 on the expiry day at 9-30AM.
Do I have any liability to hold margins/cash or buy stocks later after expiry because nobody is buying this anymore?
Even if its OTM, do I have to settle this by buying the stocks with the units I bought in the options?
Please clarify as soon as possible.
All OTM options will expire worthless. There will be no delivery obligations arising out of this.
Hi, what will happen if I have short Dishtv and it’s OTM. Do I still need to take the delivery.
Dear concern I have bought jpassociat17.5ce July contract at 0.25 presently it went 0.05 no buyers at market now. Is it will square off immediately or it leads me to take any physical sticks please reply
Since it is OTM, there aren’t any buyers. The contract will expire worthless. There won’t be any delivery obligation
so presumably all index derivatives will continue to be cash settled bcoz theres no corresponding underlying……….
1)will the exchange, at some point in time, change this too by requiring traders to buy a prescribed qty of the entire range of stocks that make up the index derivative?
2)hopefully commodities, currencies, interest rate futures will remain cash settled. right?
1. The SEBI circular only defines Stock Derivatives to be physically settled. Physically settling whole of Nifty 50 (or other indices) stocks would cost about 50 lakhs(approx) worth of stocks. Also, exchanges around the world settle index futures in cash(we shouldn’t expect any changes in India too)
2. Most of the commodities are cash-settled. However, MCX is moving towards settling them physically(Gold, Silver, etc) and we will see this happening for more contracts soon.
3. Trading in foreign currency is not allowed by the RBI for retail traders, hence, physical settlement will not be possible for currencies too.
Hi, can anyone PSL suggest, I have 2 lots of 100pe of yes bank and 1 lot of 110ce yes bank. My question is:
1: is yes bank covered under those mandatory physical delivery
2 are the above positions ITM or OTM
3 If I don’t have sufficient balance to maintain margin on Monday will it be automatically squared off 12 pm monday
4 will I be charged any penalty
2. At the time of writing this reply, Yes Bank spot is at 110.4. That makes the Calls slightly ITM(ATM) and the Puts OTM.
3. Yes, your position can be squared-off post 12 PM till market close.
4. Interest will be levied on the debit balance in your account.
Thank you for sharing contents which are very useful.
HCC spot = 12
I write 1 lot of HCC 20CE @ 0.10
If on expiry 3:30pm HCC closed at 15.
So, whether I need to give physical delivery or not?
Unless HCC crosses 20, the calls will remain OTM and you do not have to give delivery(The contracts will expire worthless)
But, I got mails 2-3 times from support & RM team of Zerodha.
Also, I call to Zerodha….
They told me compulsory physical delivery needed even if option expires worthless.
Unfortunately, I closed corresponding position.
Prakul, I believe our Support team informed you to maintain additional physical delivery margins(explained in the post above) as you kept holding the position till expiry.
Hi, under the heading “Futures and Short Option (Calls & Puts) positions”, you have only mentioned about margin but, in case of short call option, the requirement should be availability of required no of underlying shares in demat account. If underlying shares are present in the account then there should not be any requirement of further modified margins. And for safety of individual and zerodha too, required qty of shares may be locked from monday evening till expiry till individual does not square off the short call option.
For both Short Calls and short futures, you are required to have the stock in your Demat which will be debited in case of delivery. As a broker, we cannot block your shares from Monday(we can only do it after expiry), hence, we block the margins to cover risk in case you end up selling the shares.
Why r I playing so safe. If I have 10 to 20 lacs worth of shares, I m not going to flee away. Even cash can’t be withdrawn in 24 hours. You are a discount broker that doesn’t mean discounted use of brain also.
Praveen, you can pledge the shares you hold, the collateral you receive will cover the margins required
If I pledge my shares, don’t I need to bring in extra margin?
Can zerodha not provide the pledging part. So you can not block the shares but if I pledge the shares with you then you can block the shares and should not require margin for the same.
1. If I have a doubt regarding whether or not the intrinsic value of my options is sufficient as margin requirement… Is there any indicator or flag which I can check to see whether or not I’m meeting margin requirements for a particular CTM position so it doesn’t expire worthless.
2. If physical settlement happens, can I BTST sell the same shares on following Friday (or next day)… Trying to approximate a cash settlement with much higher fees…
1. Unless you have Deep ITM options, the margins won’t suffice. Maintain margins as mentioned in the post. The same is updated on the Margin Calculator.
2. No, the shares will be delivered to your Demat only on Expiry+ 2 days(Tuesday).
Hi – is there any update on the 46 shares listed for physical delivery earlier for this month (August)?
For now, the list remains the same.
How many days before I have to square off my derrivative position to avoid physical settelment
You need to square off your position before expiry if you don’t wish to take physical delivery. However, the liquidity is quite low close to expiry, so you’ll have to plan your trade accordingly.
I bought infy call in option at 11.25 price…nd nw it z 1.80…what shuold i do nw??
If it expires out of the money, you don’t have to do anything.
If it turns ITM, margins will be blocked as mentioned in the post above.
So,until the position is OTM-We don’t want to maintain additional margin,only if it reaches ITM anytime in expiry week we need to ensure this additional margin, am I right?!
I have a few call options for the August expiry. Till what date/time can I hold them before Zerodha squares off my positions.
For Futures and Short options, we have already blocked margins(mentioned in the post above). If your account falls into negative balance, our team will square off your position after sending you a margin call.
For long options, margins will be blocked on Thursday and your position will be squared-off post 12 PM if it results in a negative balance.
I have bought one lot each of mgl call, Bata call, marico call, and pnb call expiring on 30th Aug, can I hold till expiry n sq off before expiry ..will I be charged extra from Monday, ? Playing advise,, my account balance is low
If you have bought options, margins will be blocked on Thursday(50% of the contract value) and your position will be squared-off post 12 PM if it results in a negative balance.
I have a few call options of MGL for the August expiry. Till what date/time can I hold them before Zerodha squares off my positions.
Sir What to do if i dont want physical delivery??….if i plan to close the position on last monday still i have to maintain margin???
As soon as you close the position, margins will be released.
Margins will remain blocked as long as you have the position open.
I have 2 lots of ApolloHosp Aug 1500 ce.
1. Till when can i sell them to avoid squaring off or margin blocking?
2. What is the deadline to avoid physical delivery?
3. Will i be charged full amount for delivery as i don’t want it?
4. I intend to sell it before any penalty is placed. Please help as i cannot reach customer care over the weekend.
I am short rcom aug call of 30 strike price since this is OTM call what will happen on day of expiry
Do i have any physical settlement obligation.
If RCOM remains below 30, you will not be obligated to deliver the shares as the contract will expire worthless. However, additional margins will remain blocked in your account till expiry.
Hi, I have bought BEML 900CE at 8.5. Now it’s 2.5 premium. How much margin should I have in my account to make sure it doesn’t automatically squared off till expiry starting Monday. I will be squaring off before expiry myself
Since you have bought options, margins will be blocked on Thursday(50% of the contract value) and your position will be squared-off post 12 PM if it results in a negative balance.
Please provide the list of the stocks scheduled for physical delivery for August 18 expiry.
Physical delivery stocks
I have ongc 200ce …5 lots…i can’t sell it…what will happen at expiry
Rcom 30ce is OTM as of 24th Aug and let’s say it becomes ITM or CTM on or before 30th Aug and at the same time if Rcom goes to F&O ban on the expiry day and I don’t able to sell or squareoff my buy position due to non finder of buyer or system issue then what would happen please Claify
Samir, even if there is an OI ban on RCOM, you will be able to square-off. Unlikely that you will not be able to find a buyer as there will be option writers who would want to cover their short positions.
In the unlikely event, that you are not able to square-off, you will be obligated for a physical settlement.
I have option position of UBL 1500 CE @ 9 I buy and now it’s 6.25 ( underlaying stock at
1395) and i getting msg from zerodha abt physical delivery so and I don’t have money of 30% If I don’t money and I don’t want Physical delivery and I want square off my option on 27 aug and expy on 30th aug so I don’t get any prbm if I m not maintain margin of 30%
Or mandatory to take physical delivery of stock
Y bcoz I learnt tht option buyer have right to exercise and if he don’t want means option contact becom closed and no need to maintain any margin
You are free to square-off your positions until expiry.
Yes, on expiry, you have the right to exercise, if you choose not to, you will lose the premium you’ve paid.
I have option position of UBL 1500 CE @ 9 I buy and now it’s curently 6.2
( underlaying stock at 1395)
If I Failed to miantain Margin on Monday it will auto sqr off or it will continually trade till expire day or
If I want sqr off but no buyer means what will happen
I m not ready to take physical delivery means what will happen bcoz I m call option buyer I have right to buy but not obligation so what r consequence will occur
Since you have bought options, margins will be blocked on Thursday(50% of the contract value) and your position will be squared-off post 12 PM if it results in a negative balance.
Delivery obligation will only arise if it becomes in the money(where still you have the option to exercise or not)
I am long 1 lot of rpower . What wil be the status if i do not square up this august expiry
Answered above 🙂
I hve shorted hexaware 450 pe option at 4.5 which now at at a strike price of 30
what if the hexaware trades at 425 at expiry and my position is not squared off before expiry ?!?!?
what will be the loss for me ???
Since you are short put options, you will be obligated to receive the shares in your demat on expiry. The stocks delivered will be at the buy price of 425(assuming Hexaware settles at 425 on Saturday).
Your loss for the short option position will be intrinsic value minus premium paid (25- 4.5= 20.5)
The P&L for the stocks delivered will depend on the price you choose to sell after it is delivered
so i should maintain 1500 * 425 = 637500 in my demat account ?!?!?
also wat will be the scenario if i have bought hexaware 400 ce at a buy price of 20 and hexaware ends at 425 and its in compulsory delivery category. Its bit confusing since i am new to this. pls clarify.
Yes, you need to maintain margins equivalent to the settlement price * lot size on expiry.
Mera pahile activate karao
6 month bank statement have been uploaded at the time of opening account but f&o not activated till why?
Can you contact Support?
They will be able to help you with Account specific queries.
I have 12.5 PE for rcom..which expires tomorrow..how much balance I need to maintain…I m not able to exit
I have 12.5 PE for rcom..which expires tomorrow..how much balance I need to maintain…I m not able to exit even on mkt price and on limit
You need to maintain margins equal to 50% of the contract value before 12 PM on expiry day.
Since, its deep out of the money, it will expire worthless. You don’t have to do anything if you are not able to exit.
What will happen if I am not able to maintain required margin for OTM contracts & where there is no buyers to squareoff ?! Will the brokerage square of my other F&O positions to meet margin requirement? or Will you levy any penalty?!
I have put option strike price 60- 5 lots of CG power. The underlying price is 59.10.This is august expiry. I am new to this,Please explain to me what should i do, I dont have sufficient money to take delivery
You need to bring in at least 50% of the contract value to continue holding the position before 12 PM on expiry day, otherwise, your position will be squared off by the RMS team.
In case, if it isn’t squared-off, the position will be marked as ‘do not exercise’ even if it is In the money due to shortage of funds
In this case if it is ITM and have no fund, will it get squared off.
I have IDBI 80CE long, no buyers and not able to sell it, Am i applicable for physical delivery.. or it will go worthless
Since, its deep out of the money, it will expire worthless. You don’t have to do anything
SIR I HAVE DEBIT BALANCE IN MY DEMAT -769885. I HAVE NO OPEN POSITION
PLEASE GUIDE ME . CHECK MY ACCOUNT DETAIL USER KX 3638 MY MOBILE NO 9001796142.
Since you have squared-off your long option position, the physical delivery margin blocked will be reversed. Please contact our Support team who will do it for you.
I have canfinhome Aug 330 CE..I didn’t know this physical settlement ..
I didn’t have sufficient balance I had only 50k but when I login In today I got shocked my total account became 1.5 lacks negative …
So 2 lacks debitd from my accnt …
How to proceed in this
Prasad, your account went into debit balance because of the margins blocked as mentioned in the post above.
I believe you squared-off the position yourself(or our RMS team would have done it) to avoid physical delivery?
Means now parsad have to pay 1.5 lakh to zerodha
Correct, but if the position is squared-off, the margins are released.
What is the situation on the BANK NIFTY and NIFTY? If I only trade long on Index Options, will these restrictions impact me?
Index options will have no change because they cant be physically settled as they dont have any underlying to bbuy. They continue to be cash settled as before.
As Vamsi explained, Index options will be cash settled and will have no physical delivery obligation.
I have written Hexaware 440 CE at 10/-(1500 lot size) and also assume that I have 1500 shares(which have cost basis at 400) in my DP and sufficient margin for the same to hold it till expiry and get it exercised.
Now, let us say on expiry day, stock price ends at 435 due to which my contract becomes CTM as per the rule above. So this would get exercised randomly and if this would not assigned to any buyer who has 440 CE at that point, this would become worthless. And I will still have 1500 shares with me and I can keep premium of 1500×10 with me. Am I right?
If the stock settles at 435, the contract will expire worthless. You will have no delivery obligations. Margins blocked will be released after Expiry
Thoda hindi me samjhao.
this new ASM extra margin of 4% will it be applicable to intraday index option writers also ?or it is just for positional option writers ?
Yes, the new ASM margins are incorporated in the SPAN margins blocked, which will also slightly increase the intraday margins.
What if your system (Zerodha PI) does not allow to square off any contract? Who will be held responsible? Because on two different occasions, it happened that your servers went down and it did not allow us (Retail clients) to put any trade in the system. How do you intend to handle this.
We have ensured that the necessary measures are put in place to ensure you can square off your positions on time. However, in case you aren’t able to do so, you can use Kite or call our dealer desk to square off your positions. Please note, you will be able to square off your position only if there is sufficient liquidity in the contract.
1. Does it anyway affect intraday/CO/BO positions?
2. Where will i get VAR + ELM for the physically delivered stocks?
3. Is zerodha margin calculator updated for all these changes in margin calculations?
1. Fresh positions will be blocked on the expiry week. Hence, you won’t be able to trade intraday positions.
2. You can check the VaR + ELM margins for all stocks on the NSE website under Daily Reports.
3. Yes, Margin calculator is updated according to the margins blocked on the terminal.
I have one Short Fut and Short PE (Strike Price 1160) of AjantaPharma and the share is trading around 1106. There are no sellers to square of my Short PE. What will happen in this case if I let the contracts expire?
If the option contract expires in the money, there will be a net-off and you will have no delivery obligation.
If you end up closing one of the 2 contracts, you will have delivery obligation(give/ take).
I have the following options for September expiry:
If i square off my position before expiry then I have to take any compulsory delivery of these stocks. Please let me know.
KPIT has compulsory physical delivery obligation. The rest are cash settled.
I have squared off my position today. Still compulsory delivery obligation is there for me?
And moreover i have long call option which is OTM.
Hi I have RCOM sept CE 32.5, 2 contract it has become worth less and not able to sell. Wat will happen to this. Do I need to take physical delivery.? What other charges I would end up in paying?
As long as RCOM remains below 32.5 before this expiry, there is no physical delivery obligations and the contract will expire worthless
No, if the position is squared-off before expiry, there will be no delivery obligation
Hi, I have open position in futures for Oct month, and still receiving msg. Will my position be square of this week on Thursday. And I have taken this position from starting of this month.
Viral, are you sure you are not holding any September F&O contracts under compulsory physical delivery?
The SMS/Email was sent to only September contract holders
yes I am sure. I have call option for September month and bought futures for Oct month. So I think, my position will not be squared off tomorrow.
Having opposite positions of 2 different calendar month is not considered a net-off. It has to be of the same month.
Sir I have IDBI bank 70 CE of October month..
Now if It trades at 70+ on 24th Oct and I close my option call on Wednesday will it attract any penality or delivery obligation and in case if it expires below 70 on expiry will I be charged anything
If you close on Wednesday, there will be no obligation on your end.
If its OTM and you continue to hold it, there will be no delivery obligation either
1. I have sold call options of Just Dial oct and will buy Oct futures. Now will the margin required will be calculated individually or as a combination.
2. There is a requirement of 50 percent margin in cash or liquid bees. Will that 50 percent will apply on the whole margin or only on exchange mandated one.
1. Margins requirement is calculated at a portfolio level and you will get a margin benefit for the covered call strategy. For this particular strategy, SPAN will be blocked only for one of the positions.
2. The margin requirement(as per the schedule mentioned in the post) is on the total contract value.
For Point 2, what I meant to ask was that if the Higher Margin as per contract value is say 600000/- as per zerodha calculations but Exchange stipulated margin is say 400000/-.
Now how much has to be in cash/liquid bees to avoid interest by Zerodha.
Request your feedback on following queries.
If I hold call option and not looking for settlement
Case 1: If my strike price is ITM. No issues of settlement. If I am right?
Case 2: If my strike price CTM(3 price next to spot prize). Any settlement will be there?
Case 3: my strike is ITM. No liquidity.Unable to sell till expiry What will be the implication of settlement. Can u pls explain in steps.
1. Either this is cash or physical stock settlement ( physical delivery of shares of lot qty to my account).?
2. What will be the implication of STT charges?
3. What if I don’t have cash to take settlement?
4. What can be done to stop settlement?
5. What issue I may face, no cash but settlement is mandated?
As the physical settlement is only for 46 stocks,how this differs from other scripts.
1. My understanding is only these 46 are physical stocks settlement (as announced from July18) and remaining are cash settlement.is it right?
2 Will there be STT implication even in cash settlement derivatives?
3. For instance if I hold one lot long Reliance industries call option, in ITM, illiquid till expiry. What will the apporox cash I need to have in account and what will be approx cost inclusive of all charges like brokage, STT..(Approx with current market price)?
1. Yes, these 46 stocks will be physically settled. The rest will be cash settled(index derivatives included).
2. STT will be applicable on the sell side of the F&O contracts as usual. Higher STT for exercised ITM contracts. Read more here.
3. Reliance Industries is cash settled and since you are long options, you will have to pay only the premium for the contract.
My question is regarding short call option. If it is ITM and illiquid to square off. What will happen at expiry.
1. Whether it will not be exercised as, no stocks of lot size in my DEMAT or I may need to face short delivery
2. If I have cash to buy the lot qty and give delivery. What is the time period, from expiry I can buy and give delivery.
1. If its ITM, it will be exercised. As a short seller, you don’t have the option to ‘not exercise’. If the stocks are not available in your DEMAT, it will result in short delivery. However, you can cover this by taking a counter futures position. This will result in a net-off of the physical delivery obligation.
2. You need to have the stocks in your demat on the day of expiry plus 2 days. So you need to buy the stocks atleast on the expiry day to give delivery without it going to auction
Regarding ITM, illiquid options, no cash to take or give delivery , in queries answered above it is stated in two ways,
1.we can decide whether to exercise or not, if no cash.
2. We are obligated be give or take delivery as it is ITM.
If you are an option buyer, you have the option of ‘do not exercise’ and we will use this option if you don’t have the funds/holdings. If you are an option seller, you don’t have this option and you are obligated to give or take delivery. This is the same reason, the margins are higher closer to expiry to cover for the delivery risk.
I like to know, whether for cash settled derivatives, is it necessary to carry higher margin towards expiry? . Since this is only cash settlement, there is no point in carrying margin for buying the lot stock.
No such requirement for cash-settled contracts.
I have Shorted MARUTI FUT and Bought equivalent qty MARUTI Stocks. What will happen on Expiry?
Doesn I have to bring in extra margin?
I can close Stock on any day and time but what will happen to MARUTI FUT once I sell all my stock on MARUTI on Expiry?
1.Margin is blocked for the Futures trade as soon as you take the trade, the position is marked to market daily. You don’t get any margin benefit on this.
2. You can exit both your stocks anytime and the futures on or before expiry at will. The position will be exposed without any hedge.
Will zerodha notify me that i am holding a compusory delivery stock derivative postion as the list are updated and suppose for some reason i do not know that i am hoding compusory delivery stock derivative position.Or is there any other way to know the same in real time wheather any of my derivative positions falls under phsical settlement list.
All physically settled scrips are updated in this sheet. You can check if you hold any physically settled contract from time to time
A) If I am carrying 1 lot Short Future & don’t have any shares in my D-Mat A/c on prior trading day immediate before expiry day (i.e on E-1) and I have fulfilled the stipulated margin in Cash i.e 80% of contract value or [Span + Exposure] whichever is higher as well:
Q1. Do Risk Management Team will square-off my position on Expiry day only Or they have choice to square-off on E-1 day?
Q2. If choice to square-off only on expiry day then at what time?
B) If I am carrying 1 lot Short Future & pledged equal number of shares to Zerodha & I have fulfilled the stipulated margin in Cash i.e 80% of contract value or [Span + Exposure] whichever is higher.
Question : What will happen on expiry day if I don’t do anything from my end?
1. The position will be squared-off on expiry day even if you have the margin but you have a give delivery obligation.
2. The position will be squared-off post 12 PM on the expiry day.
3. Your position will be let to expire and settled physically. You need to send an unpledge request on the expiry day(before 4 PM) and the shares will be unpledged and shares will be debited from your account to meet the obligation.
List of Stocks in Compulsory physical settlement will keep growing in future. So to curtail the risk & to have better literacy well in advance on this topic;
1) Do F&O Margin calculator for Stocks in the list of compulsory physical settlement (for last 4 days from E-4 till Expiry day) is available / is there any plan to make it?
2) Scenario builder for various F&O strategies: % of Margin / Funds in trading A/c / # of shares requirement in D-mat with timeline will help a lot.
3) Do margin benefit available for covered/protective/spread positions? (for last 4 days from E-4 till Expiry day)
1. The F&O margin calculator displays the updated margin requirements(including physical delivery margin) for the position.
2. You can build strategies on the margin calculator page itself(margin benefits, premium received are displayed too).
3. Yes, you will get the margin benefit as per SPAN but since the additional physical delivery margin is added to the exposure margin, your overall margin for the position(s) will still be high.
Sir I have 5 lots of MRPL CE 90 expiry 29-Nov-2018.. Can I square off it on Monday i.e. on 26 Nov.. or have to required fund for physical settlement.. also I didn’t know much about physical settlement i.e. how much amount should be required etc.
You can square off the position anytime during the week. If you continue holding the position, there will be a margin block.
Also tell me that if due to some reason the position is not square off and sufficient margin is not maintained in account then what happens
I have 1 lot of NHPC 30 CE call option. Now the spot price is 26. I just got an sms regarding physical delivery and sufficient margins to be maintained.
Iam not able to sell it as there are no buyers.
What will happen in this scenario.
If it closes below 30 on the expiry day, it is OTM right. And it also became worthless as there are no buyers.
Pls let me know what needs to be done
Yes, as long as NHPC remains below 30, there will be no physical delivery obligation.
Will any margins get blocked. What happens if iam not in a position to maintain sufficient margins for the next 3 days.
Margin block will only be applicable if the option turns ITM.
Margin block on Expiry day will be for all contracts.
If your account results in a debit, position will be squared-off
I have 3 lots of Hexaware 340 CE November around 4. Suggest me…
As long as Hexaware remains below 340, there will be no physical delivery obligation.
Physical delivery margins will remain blocked as long as you continue to hold the position.
I have 4 long put options 57.5PE of IDBI bank. What is going to happen to happen to my position on Monday. How much margins do I need to maintain in my account and what is VaR +Elm of IDBI?
As long as IDBI remains above 57.5, there will be no physical delivery obligation.
Physical delivery margins will remain blocked as long as you continue to hold the position.
You can find VaR+ELM of all stocks here. Margin block will be 20%, 40%, 60% and 80% of this as mentioned above.
Can you plz answer as to what is Zerodha’s position regarding trading in the scripts liable to physical settlement. Till last month , trading was stopped in them from Monday itself (till expiry on thrusday). But this month we are able to trade in them today as well. So what is Zerodha’s current positon regarding that. Can we trade this time uptill Thrusday or today or what? (So I can take my positions accordingly.)
Thanx in advance.
We have been allowing fresh positions till Wednesday in physically settled contracts since October expiry. However, additional physical delivery margin as mentioned in the post will be applicable.
I have bought yes bank 130pe at 2 Rs. of Dec series. Can I carry forward till Dec Expiry. I have full balance I.e. Lot 1750*2=3500. So can I carry forward till Dec Expiry..??
Yes Bank is cash settled so there are no physical delivery obligation.
For physically delivered scrips, you can hold the contract until Expiry – 4 days without bringing any additional margin block. The exchange starts levying additional physical delivery margin 4 days before expiry for buy ITM options which is explained in the above post.
Hi, I had sold YESBANK18NOV180PE (sold 18Nov put at strike of Rs.180). The option closed yesterday – so I should be delivered the 1750 shares of Yes Bank and charged Rs. 180*1750. Instead my account has been settled in cash.
Can you explain why it was cash settled? I have maintained adequate cash to accept delivery of the shares. Yes Bank is one of the mandatory cash settled counters and you sent me e-mail to maintain cash balance in account – which i did.
Yes bank is cash settled, there won’t be any physical delivery obligation.
I am holding OTM JETAIRWAYS 340CE 27-Dec Expiry (Cmp :255).
Till now margin required was 90k for one lot (Due to the Physical Settled Margin Obligations).
What happens if I don’t add the additional margin required as it is OTM and has a gap of more than 30% Difference.
Please highlight the process for the scenario and impact if i don’t have sufficient additional margin as per the circular.
Jet Airways is not physically settled, the settlement is as per cash settlement on expiry, hence, no additional margins requirement.
The 90K margin requirement that is blocked is SPAN+Exposure alone
I have got the Margin increased hugely and when I checked the updated excel in our Zerodha. Jet Airways and STAR was added as per the recent circular from NSE. Earlier the Margin required was 50k+ a day before and margin got increased to 90k on friday.
it would be great if you could explain us the implication for not having the E-4 margin in our account for the deep OTM call/put (For Ex: For strikes with difference >18% upside and <20% downside as per the SEBI guidelines.)
Sorry, my bad. I presumed the margin increase in Jet Airways FO was due to the increased volatility last week. While the exchange blocks only SPAN+Exposure for Futures and Option Short, we at Zerodha block additional margins due to physical delivery risk arising if your position turns in the money.
Your account will result in a negative balance and interest will be charged at 0.05% per day for the debit balance.
Unfortunately few of my positions was squared off by RMS just now. I called the support team and requested to look into my concern of deep OTM position. There is a 30+ % difference for my calls and there is high chance that it will not turn into ITM with just only 2 trading days left. The position is safe as per SEBI circular upside difference of 17.74% for risk free. The position will become worthless in couple of trading days where as it got auto square off @ .50 & 0.65 which is very disheartening. Lucky that there was sell order at least in this price if not i would have incurred loss in this trade which has atleast 90% probability that it will be zero on Thursday.
Having said that I understand this may be a new scenario and it would be great if we could implement with a rule of 20+% difference for the respective Call/Put to not to make the position come under Zerodha RMS team monitor which will not affect any traders like me in the future.
Thanks in Advance,
Guna, discussed this with our RMS team. Its a system driven square-off where I believe your position wasn’t fully squared-off and was squared off to the extent of the margin requirement for the other positions. While I’ll pass on the feedback concerning short positions far away from the current price being squared off as long as the exchange stipulated margins are satisfied, I believe there is very little that can be done about it.
Thanks a lot, Faisal.
A little you do would be great for traders like me.
Can you please let me know the outcome of the planned course of action on my feedback so that I can plan my trades in future for the Physically settled scrips.
Thanks Again for the Quick and Prompt Response,
Sir, I purchase 1 lot 0f IDBI bank Put 57.5 DEc series price at 0.55 . Now Share is trading at 62. The broker asked me to square off on Monday. There is no buyer. Whether it will go in physical delivery settled.
You’ll have to check this with your broker, Harsh.
At Zerodha, we allow clients to hold positions as long as they have the required margins/ holdings in their account.
I bought 1080 Jan cal at 27(lot size 550) and now 35. If I square off how the settlement happens.
Thanks in advance
Firstly, which scrip are you trading in? Is it physically settled or settled using cash mode?
Answering your question, if your position is closed before expiry, it will be cash settled, regardless of settlement type.
Hi Faisal, if we long current month future & short next month future, will there be any obligation of physical settlement at the end of current month?
Yes, there will be a take delivery obligation.
Net-off is only possible for contracts of the same expiry as explained in the post.
1) If I am a option buyer then what is the procedure if I wish to Assign my position is In The Money (ITM) at any point of time well before the contractual expiry?
2) Do you think the compulsory physical settlement jeopardize the interest of the option buyers? Since as per the definition he/she has right to buy the shares & right to sell the shares for the Call & the Put respectively which turns into Obligation now….isn’t it? Your thoughts please…
1. All long ITM contracts will be deemed to be exercised if the intrinsic value of the contract covers STT and other charges(if it is assigned). The broker(Zerodha) will mark this as assigned with the exchange based on the calculation.
2. This still remains a right(not an obligation) to the option buyer and he/she can choose to exercise it or not. Yes, there are additional physical delivery margins being charged for the long position he/she holds but this is for the exchange to enable smooth delivery of the stocks if the option buyer ends up exercising his option.
1. My 1st scenario is not related to expiry day. What is the procedure if I wish to assign if I am sitting on ITM position today ? e.g. If I purchased Reliance January Call @ Strike 1100 so what is the procedure / method if I wish to exercise my right today?
1. As long as the position remains ITM, it will be exercised. Unlike American Options, you cannot exercise options before expiry. Read up on European Options here
Ohh…ya…I was under impression that all stock options are American style…thanks for clarification
Hi, I am short on JetAirways CE 350, which is a under compulsory delivery. I also keep physical qty equal to 1 lot.
In case if I left the CE to expire…
1) Do I have to deliver the physical stocks?
2) If so what price I will get? Is it at the strike price Rs350/sh?
1. Only if the contract ends up in the money on expiry(If Jet Airways closes above 350).
2. If Jet Airways, ends up above 350, you will have to deliver the quantity equal to the lot size. Your effective sell value will be 350.
Re-iterating again, you are obligated to delivery only if Jet Airways closes above 350 on the expiry day
I’ve a bought PUT option of KPIT 190 strike price. Is it applicable for physical delivery or should I exit this position or leave it as it is? As all contracts will expire on 24 Jan 19.
KPIT is expiring on January 23(not 24). The contract is out of the money and it is unlikely that you will find a buyer tomorrow. If you leave it as it is, it will expire worthless
But zerodha should allow buying of contracts. Let’s see wockhardt. I was sure that results will not be good, if you want to buy on Friday it’s costly and odata it’s cheap . 400 pe was at 1.5 in fraction it touched 12 rs. As you are not writing ir going short you should be allowed to buy. Let’s say wockhardt reaches 390 on script atleast there will be a buyer for 1 re. Retail traders hit jackpots on earning and near exipy. Faisal if you remember we had a long talk on phone on this and RMS team will be kept in discussion. I am waiting for that.
Kesava, we’ve amended our policy, we allow fresh futures and short options positions in the scrip until Wednesday(Expiry minus 1 day). Unfortunately, due to the costs of physical delivery, we cannot allow fresh positions on the expiry day.
Fresh long and shorts are both disallowed on expiry day.
No Faisal, it’s not accepting order i was neither able to buy call of indian bank nor a put of beml. It’s on Tuesday. Now at 1.55 pm…01/29/2019
I have bought Sre Infra 42.5CE @0.4 and now the premium is 0.05 and no buyer at all. Sre infra is trading at 29. 85 and my option is OTM. Got a message from Zerodha to maintain mergin in my account.
Should I have to maintain any margin in my account for an OTM option which is going to expire worthless?
I believe your position was OTM on the expiry day, hence, there won’t be any delivery obligation(or penalties).
I have 4 lots of RCOM 19 JAN 8PE . Total 136000 units. I bought them at 0.05 price. They are not execution when i try SELL.
Will be charged if i am unable to sell before expiry?
I have a call option of 45000 nos. (10Lots) India cement 95 CE @ 0.89 .Now it is 0.05. whether I have to maintain any margin ??
Do I have any obligation of delivery ??
In case I sell it on expiry date , I will be charged ??
Hi Faisal, in Put call parity cases no case of compulsory delivery can ever arise since it always Short Future(security deliverable) & ITM Long Call(security receivable), or Short Future(security deliverable) & ITM Short Put(security receivable)?
Himanshu, you are right. If your combined positions result in a net-off, there won’t be any delivery obligation. However, you are required to maintain the additional margins till expiry day due to uncovered position risk.
In the above article, it is stated that If the long on Option is deep ITM (ie below CTM) then it is manadatoey to take physical delivery.
1. In that case don’t the option buyer have option not to exercise?
2. In same case, If no money in account to exercise, can it be made ‘Do not exercise’ ( even if deep CTM)?
Looking for your reply..
1. No, it can’t be marked as ‘do not exercise’ if it isn’t a CTM strike. Also, the intrinsic value of the contract will be high enough to cover for the cost of physical delivery.
2. No, same as point 1
please explain the below scenarios,
1. Deep OTM long Call option, expiring worthless, even in that case high STT is applicable on expiry or I will be loosing only the premium
2. In CTM long Option, if decided not to exercise, what will be the P&L. Whether I will loose the premium or will there be any profit
3. Deep ITM ( deeper than CTM) as defined in this article, even long option holder are obligated to exercise or can be decided not to exercise.
1. As long as the contract expires worthless(OTM), you won’t have any STT obligation.
2. You will lose all the premium you’ve paid.
3. No, you don’t get the option. It doesn’t make sense to mark deep ITM contracts as ‘do not exercise’ as your loss will be quite high.
If i am short in an ITM CE, and because the contract is illiquid, i have covered with a long futures (same series as ITM CE) there will not be any risk of physical delivery being triggered (assuming netting off). In this case would the additional margins still be applicable in the last week?
Although the position will be netted off on expiry, additional margin block on the last week of expiry will remain applicable due to uncovered position risks.
For stocks in physical delivery list, 1. Even if it OTM, should I need to bring additional permium Monday.
2. If the Stock if is in F&O ban, and unable to squareoff due to illuquid, OTM needs additional margin
1. If you have a buy position, no. For short positions, it will be applicable regardless of the moneyness of the option.
2. If the position has no liquidity to square-off before expiry, there will be physical delivery obligation.
I have nhpc 1 lot @.05/-. And no body buy it. What will happen on expiry if it is not square off. How much margin i need. Bcoz I have no cash. Even 500/-
I’m guessing this contract is OTM, hence, it will expire worthless if it continues to remain OTM till expiry.
You will have no delivery obligation.
I have nhpc ce27 bought 1 lot @.05/-. And no body buy it. What will happen on expiry if it is not square off. How much margin i need. Bcoz I have no cash. Please reply
What is the policy on settlement of options of scrips not in the compulsory physical delivery notification.
Rohit, they are cash settled by the exchange.
If it expires ITM, the option buyer will receive the cash settlement equal to the intrinsic value of the contract from the option seller(writer).
i need list of compulsory delivery and amount of penalty if you have any document for today’s expiry.
Dear Nithin Kamath sir,
Your support team is saying that because of this policy (physical delivery) it is compulsory to have a demat account and equity segment enabled.
Sir please tell me that practically how can a small trader take physical delivery of shares. Right? You anyways have necessary safeguards to block additional margin until expiry. The trader will be forced to close position and a situation of physical delivery never arises. So with so many safeguards why insist on a demat account.
Alternatively, to further protect yourself and the trader give an option to disable these contracts for clients who do not have demat. Or just enable index futures and not stock f&o.
Can you please take this up with your team internally? The request is to provide a trading account only (like earlier) and not force people to have demat.
please advise Nithin Kamath sir. Why force demat and equity segment on trader? If delivery is a logic for demat then please ask your mcx clients to rent warehouses to store aluminium and zinc also
Please comment sir. Is it really compulsory to have demat? If yes, why are ‘trading only’ forms still on your website. This SEBI rule came quite sometime ago…
Hey. Consider a situation where for some reason you have to take physical delivery. It could be anything. We may not be able to close out your position simply because there’s no counterparty to the trade. What happened then? As such, a demat account is mandatory to have an account with us now. As for the trading only forms, they’re available for legacy reasons, like if someone with a joint demat wants to open a fresh trading account.
Thanks Matti ji. I know you are working for benefit of trader. Thanks for explaining.
I also got the same reply from support team. I downloaded ‘trading only’ form given on resources section of zerodha website. Filled and sent it. Support says that you need a demat account also so send us demat form. I don’t want equity segment. Why are there trading only forms available on website if you don’t allow an account without demat?
can you pls tell me the latest list of stocks under physical delivery rule…or where i can have this list.
You can find the updated list here
Request you to help arrange/sort market watch alphabetically at a click.This will help traders viewing fast
If I am doing covered call in physical settled stocks (Will have lot size number of shares in demat account), still need to maintain extra margin?
Yes, you need to bring in the additional margin in the expiry. You can free in margin by pledging your stocks which will cover for the additional margin charged.
It doesn’t make sense to ask for extra margin, if already underlying stock equal to lot size is present in demat account.
Any delivery obligation which will arise if short call option becomes ITM can be handled using stock present in demat account.
Why there will be need for extra margin up to 80% of contrris not clear.
Even if I pledge the stock, I won’t get full margin due to 50:50 cash to collateral ratio.
If short option become ITM and underlying stock is pledged. Will it automatically unpledged and delivered?
I have a query, could you please kindly clarify me.
Today 27 Mar’18, i sold “UNIONBANK MAR FUT”. Then i received a mail from Zerodha team… you are holdings must have physical delivery.
1. So my query is that, tomorrow 28 Mar’19 is the expiry date of all contracts. However whether my position will expiry tomorrow (28 Mar’19) or how it will have an impact ?
2. If i sell tomorrow (28 Mar’19) BTST, what charges do i need to bear ?
Kindly let me know.
For out of money call options, the article reads as follows
OTM (Out of the money) options are those strikes which are above the final settlement price for calls and below the final settlement price for puts. All OTM options will expire worthless. There will be no delivery obligations arising out of this.
I have certain significantly OTM call options and are on course to expire. However the system automatically increases the margin requirement even if the option is OTM. Tried explaining this to the representatives and believe they go by the rule book and have lost my profits on account of this awareness. Let me know if I am missing something.
Hey Kishore, the strike could go ITM at any point until expiry, hence the increase in margin requirements across strikes.
I Sold IDBI bank put option march 46 PE for Rs 2.00 (one lot-10000). Now the stock is at 42.60 . Can I short a lot march IDBI bank future tomorrow (expiry date) to avoid physical delivery. ? Also what is the expense including the fees and brokerage etc. after expenditure of rs 460,000 in case of assignment of physical delivery in case I let the 46 PE expire without resorting to short a same month idbi future?
Suppose I have A long Put which is deep ITM on the expiry date so can I take a long call of same strike for net off instead of having physical shares in my demat Account.
Yes, that will net off the positions. However, both the positions should be ITM on expiry.
Hi I have south Indian bank 22ce of this month what will happen??
Looks like your calls expired worthless yesterday. There will be no physical delivery obligations.
Sir – under this new policy, my FNO position was automatically squared off by your company at 10.48am today (25/04/2019). This automatic square off resulted in a loss to me. Kindly advise where you mention that you will automatically square off the trade any time of the trading day if margins are over board and not at end of the day. After your squared off, the script I was trading in came down and I could have easily closed my trade at some small profits and avoided the loss.
The other thing i noticed is your nest trader is not live and perhaps 30 minutes or even more coming with a delayed feed. As i write Nifty 50 is trading at 11759 but nest trader is showing 11780. This is causing immense confusion and not getting my trades correct. Please also publish the delayed feed policy of your company so as to not confuse us while trading.
For once I must say after being a great fan of Zerodha for over past 5 years, today i have faced the first disappointed with your esteemed organisation. I sincerely request you to look into this short comings as I always felt you looked after your trader customers very well.
Margin shortfall square-off of positions can happen anytime during the day. You can read the margin policy here. This has been our policy not just for physical delivery but all F&O positions. Given that it was a physical delivery position we had sent enough margin shortfall SMS and emails over the week.
Concerning your query on NEST feeds, this is the first such case to be reported, I will get this checked as soon as possible and write to you.
On expiry day if I change NRML FNO to MIS then will Zerodha auto square off if I forgot to close FNO ? .This way I can avoid physically settlement
While auto-square off will run for MIS positions, we can’t guarantee execution on expiry days as liquidity is scarce due to the physical delivery obligation.
I forgot to square of Nifty call options today (9th May expiry)
What are the repercussions
How much will I be taxed
I had 2 lots of 11350 Call (9th May expiry )and 4 lots of 11400 Call Option (9 May expiry)
Both the contracts expired out of the money, so there will be no expiry obligation. If you bought these contracts, you lose the premium you paid, if you wrote(sold) these contracts, the premium you received will be fully yours.
I have 2 querries.
1.If I have otm options then will the margins start increasing from Monday.
2. If I sell deep otm option then will my margin start increasing from Monday.
Please answer urgently.
1. No, margin will automatically get blocked when the long OTM option turns ITM.
2. Yes, all short option contracts will carry the additional margin block from Monday.
I bought tatamotor May 130 PE @ .55paisa now it comes .05 paisa n there is no buyer to sell and what will happen on expiry thursday
They expire worthless so u will loose your premium only.No need of having extra margins unless it becomes Itm
Really poor policy by SEBI. Imagine if 1 min before closing it goes ITM the hit that a small investor will take if it is treated as CTM. This increases cost of trading F&O and makes price discovery inefficient. Shows that incompetent people have come up with this without thinking consequences through.
I bought jubilantfood CE May 1500 @ 2.30 now it comes .05 paisa n there is no buyer to sell and what will happen on expiry thursday
The contract would have expired worthless. There won’t be any physical delivery obligations.
I am having 5200 long position in ZEE future and 5200 short position in 400 CE call of ZEE. So, the net effect is zero. In this, there is no risk. So, what would be the margin in this case. Still, it will be 60%? and 60% of what Long Future or Short Option. If it will be 60% in both case then the margin will be more than delivery value of stock. (60% + 60% = 120%). Please consider this for clients having hedge position because inspite of having balance of 600000/- in ledger account and long ZEE future, today I was not able to sell 400 CE call of ZEE. The message was coming that margin is short.
Mona, if you close one of the two positions, there will be a delivery risk, which is a risk to the broker. Hence the margin block.
I have two open option contract and the current price is less than strike price . I am currently facing loss of 2k. So what will be the impact on me . Will I lose only the premium amount or any additional charges will be applicable
Im assuming you are long call options. The contract would have expired worthless. There won’t be any physical delivery obligations.
I puchese dishtv 40call .25paisa today no buyer which effect my account
I buy 2 lot of TATAMOTORS PUT Option of strike price 250 and I have sold 1put option @strike price 220 & sold 1lot put on strike price 240 of TATAMOTORS.
What will happen on expiry
I have 3 options position today..
1.AURO PHARMA 700 PE ( PRM 18.55) presently Loss 7150 (ITM)
Margin 131500 ( 82950+48553)
TOT Margin = 131453
2.YES BANK 170 CE( 0.20 prem)
In small profit ( OTM)
MARGIN (48400+ 79000)
TOT Margin = 127410
3.YES BANK 130 PE (0.10 prem)
Small profit ( OTM)
MARGIN ( 40700 + 79000)
TOT Margin = 119710
Margin total 378624
FREE CASH 393252
Margin USED 346600
Kindly guide what should i consider tomorrow….
I purchased yes bank 5 calls ce strike rate 310. The premium now 0.05 paisa. No buyers. What will happen on expiry.kindly advise what should I do tomorrow.
I purchased yes bank 5 calls ce strike rate 310. The premium now 0.05 paisa. No buyers. What will happen on expiry.kindly advise what should I do tomorrow.I am currently loss of rs35k what will be impact on me . Whether I loose premium or any addl charges or any thing.
I shorted KSCL 500 call at 7.65
There r no buyers and sellers.
Tomorrow is expiry
At what premium will this option get closed?
You would have to give delivery of stocks equal to the lot size of KSCL if the positions were left open on expiry.
I bought tatamotor May 110 PE @ .0.20 paisa now it comes .05 paisa n there is no buyer to sell and what will happen on expiry thursday
Up till when can one take fresh positions in F&0 stocks which are liable for physical settlement(intraday and overnight)? Also is there any increased margin for the same ?
You can take fresh positions up to Wednesday of the expiry week. Margins are increased up to 100% depending on when you take the position.
my quiry is that , there is the delivery order share is not show in holding position . My Id is GL1272
Have you submitted the PoA for your account? Stocks in the demat account aren’t shown on the platform until PoA is processed.
Infibeam 45 CE and ARVIND 60 CE 1 QTY
Infibeam closed on frday at 45.25 and Arvind at 65
45 Infibeam CE bought @2.5 and Arvind 60 bought at 5
What would happen on monday to my margins ( Exipry on thursday)
The margin block for the contracts will increase from 40% of the contract value on Monday to 80% on Thursday. Your position will be squared off if you fail to keep up with the margin requirements.
Hello. I have nalco 60CE @ 0.40 , from last two days I tried to could square off even at 0.05 paisa but can not, what are options for me to avoid physical delivery ? nalco trading at 49.20 INR NOW.
Since its deep OTM, you will not find buyers for your position. The contract will expire worthless on expiry if NALCO remains below 60.
Suppose now 4 days left to expiry of june series . I have bought put option 20 strike price . What is the requirement and what i should do on monday to avoid any trap.
Is there any margin requirement in buying options ??
Options or future both will attract Margin as per contract value only for Physical delivery listed companies . from Monday to Thursday in the expiry week if you wish to carry them till expiry
Yes, even long option positions will attract physical delivery margins as explained in the post above.
What about Short calls or Long puts along with stock holding. Why are you charging increased margin when I already hold the stock for physical delivery.
Due to the risk of the client exiting the holdings, we have to block the margins also. You can pledge the stock for collateral margin to make good of the increased margins.
I was unaware of the option How can i do that. Are there any charges involved with this.
Please reply it’s urgent i don’t have margin money to pay. I will be in trouble pls confirm me how to get resolution of this transaction of jetairways option transaction.
(purchased on Friday 21jun2019 Jetairways strike100CE option & expiry on 27jun2019)
I was under impression that I have to pay only 1 Lot 2200 * 1.85 = 4070.(premium)
But now I got msg n mail from zerodha for margin money.i thought this transaction was like nifty n bank options and I have to pay only premium of Rs.4070/-
Pls help me in resolution .How to get resolution on Monday morning on this coz I don’t have that much margin money.pls help me. I am trapped into margin money sms n mail.
Shall I sell the same on monday 24jun2019 morning in first phase.pls help me i don’t have that much margin in my bank account also.pls help.
I also got same email as i have nalco 60CE, my understanding is if position is OTM it will expire worthless and no need margin
in your case now its trading at 1.75 Rs, if you hv no margin you can still sq tomorrow before zerodha sq off it
may be some one with more knowledge can provide more info
Sanjay thanks for your reply.
But in case it would get ITM that’s my concern.
I am new to FnO trading platform.so not aware of all this.always under impression like bank n nifty options buying process.
But suddenly 2nd day sms n mailer came for margin.
Zerodha should reject or cancel order in first instance if client doesn’t have sufficient margin money in account.we are very small traders so don’t want any margin liability.
People will quit trading if this type of situations arises accidentally.
I appeal zerodha to give me solutions as I don’t have that much margin money to pay being very small retail trader.
@sachin : yes me too didn’t use the margin leverage ..I bought at normal put options and got the mail regarding margin and physical delivery..I am also very tensed..I have bought 10 lots ..so I dnt have that much money to keep physical shares delivery..I want to know the last day of square off before Zerodha square off
I did contact zerodha CSR early morning.n i hv closed my position.i have done it exit for particular transaction.also now zerodha confirmed me on completion n now no margin penalty or margin requirement.
Sachin and Piyush,
Since the contract you are trading is physically settled, margin requirement shoots up from 40% of the contract value on Monday to 80% on Thursday of the monthly expiry.
Our RMS team will start squaring off positions that don’t suffice to the margin requirements.
Thanks Faisal i he already exit my position with discussion post zerodha team.now i have no obligation.
@Sanjay can I square off my put option on Monday as I do not have the margin amount with me ..can you please let me know this …so that I can exit immediately at any value before Zerodha square it off..also does Zerodha gives a call before squaring it off??
yes you can square off before they lock 40% margin on Monday
What is the time margin will of 40% will get bolocked
I have put options for expiry of 27th June 2019.
I got a mail regarding compulsory physical delivery.
Can you please let me know when is last day and time for me to square off my positions before Zerodha square off it automatically.
Please let me know as I am new , also I do not want physical delivery and any charges to be held on me . When is the last day to square off all the positions so that I do not need to maintain balance for stock delivery and margins. Please reply
I have put options for expiry of 27th June 2019.
I got a mail regarding compulsory physical delivery.
Can you please let me know when is last day and time for me to square off my positions before Zerodha square off it automatically. ..
Please let me know as I am new , also I do not want physical delivery and any charges to be held on me . When is the last day to square off all the positions so that I do not need to maintain balance for stock delivery and margins. Please reply
Sir, I have indiabulls housing finance call option 760CE @2.40.
But zerodha message to me compulsory delivery to maintain margin. I have 1 lot 760*500=380000 I don’t have money what should I do?
Mr.Sridhar, I guess you no need to worry , if you don’t have enough margin you just simple sq off position and book loss tomorrow if any buyer is there. i am facing same problem. of it beseeches OTM owe np need to worry about physical delivery
I have bought Manappuram finance,TCS and LNT which are all OTM.
What is my position regarding margin All are June 2019 expiry
I was buying Voltas June call options today (Monday of the expiry week) but my order got rejected for the reason “This instrument is blocked to avoid compulsory physical delivery. Try next month’s expiry.”. Why is it blocked ?
Also, my order was an intraday order for buying call option. So, how the physical delivery come into scene? I mean it is up to me that whether to exercise the call or not and that too can be done on Thursday. Isn’t it?
We block buy option orders from Monday of the expiry week regardless of intraday or carry forward. This is due to the illiquidity in the contracts and we cannot guarantee that your intraday position will be squared-off.
Well this seems logical for the intraday. But why block the normal orders in last week.
Sir, I have syndicate bank jun -19 future 1 lot buy at 37.35 on 21.6.19
But zerodha message to me compulsory delivery to maintain margin. So what is the margin money needed for tomorrow 25-6-19 open position ? I don’t have 50% money what should I do?
We increase margin requirements from 40% to 100% during the expiry week to meet physical delivery obligations. It is explained in the post above.
What would be the value of 31800PE of bank nifty if bank nifty expires on 31781 on Thursday
The intrinsic value of the contract will be 19(31800-31781)
CORRECT SOLUTION for avoiding Options Physical Delivery : Compulsorily Square off all NRML Option Positions of last Wednesday of month EOD, one day before actual expiry.
Your Current Solution : Increase Margins last Monday onwards, so that traders are forced to square off their positions one week in advance on Friday itself.
Problems with your Current Solution : This makes traders lose all benefit of trading in Options which is most beneficial in Last week due to low cost. Also Zerodha will lose all the Brokerage on Options plus not good for encouraging Options Trade in Indian market, decreasing Options volume and price discovery.
My Request : Please implement the CORRECT SOLUTION suggested by me above. Many, including me otherwise are giving up on Options Trade.
Compulsory square-off is something that we cannot do for everyone. We have clients who take/give delivery also and who would want to trade on expiry day too.
It becomes risky for us to allow clients without the delivery margin/stocks to hold positions till Wednesday as liquidity dries up on the last 2 days for most contracts. The policy will be made more accommodative if liquidity picks up in these contracts.
I understand very few clients would like to put 80% of Physical Values to do Options trading on last day of expiry. Better for them is to trade in MIS Equity or Rolled-over Futures by pledging just 20%-30% of value !!
And how can the liquidity pick up if the largest broker of India is strangulating the Options Trade in last week !
Both these paranoid safeguards – by Exchange and by Zerodha are killing the last week Options trade. I wonder what was wrong in Exercising the Options or letting them expire Worthless, as was the practice earlier, and is the practice in rest of Developed world?
For physical delivery, you need to have 100% of the funds to take delivery. I understand 80% of the contract value affects your ROI but this is how physical delivery is designed by the exchange.
Commenting on the settlement procedure followed in US/UK markets, all stock F&O are physically settled. Index F&O continuous to be cash-settled and is likely to remain so.
yesterday i tried to buy call option ( just 1 day before the expiry) i was not aware of the latest developments in options. hence i got the same message and i’m unable to buy the option. can you imagine what is the worth of that option today it was increased 22 times(2230%) and i’m scolding all the new regulations now. it was like once in a life time opportunity.
Hypothetical question – Let’s assume I have 1 lot Buy position in JETAIRWAYS JUN Future contract. On the day of expiry, I see that Cash market is quoting at 70 while Future is quoting at 60. I do not hold any JETAIRWAYS shares nor do I intend to take delivery.
What happens if I sell shares equal to 1 lot in cash market and do not cover either positions. Does Future Buy and Cash Sell positions net off ? Or do I have to deliver shares for cash market sell and take delivery of shares in futures market?
Both the cash and futures positions won’t be netted off(The exchange doesn’t allow that).
Your Equity sell will end up in short delivery if you don’t have the stock to deliver and you will receive the stocks for your future long in your demat account.
I knew the answer but wanted to throw out the lacunae in the policy adopted by exchange. If the intention of physical delivery is price discovery and reduce manipulation on expiry day, exchanges should net off the F&O and Cash market positions. This would also bring the prices in F&O ad cash market as close as it can be on expiry day.
Also, now that physical settlement is in place, SEBI should also completely do away with lot size. Why should learned and well informed small investors not be allowed to participate in the opportunity of making money. I don’t know what SEBI has against the small investors and why it wants to restrict their participation. We need level playing field for everyone, not just institutional players.
I’m holding adanipower 40 pe 25-jul-19 expaire, but this option now .05 can’t sell. Any problem to this option ( in case I’m holding till hold expaire 0.05).
I don’t know about rule open position f&o
So next time I care about it
I have buy option yes bank 75 pe
July 2019 expiry….. Current market price of yes bank is 84…..
What will I have to done on Monday please guide…..
Sir i was unaware of the physical settlement rule and holding yes bank 90 pe. Can i square of the position on monday without extra margin
What is the time on Monday RMS team will block 40% of margin. Since I have bought CE option and don’t have fund to add in margin
I want to ask you i am buying Call option normal buying so pls what is the status of Monday to till expiry date
Oh my god , suddenly shocked on watching mail “Positions in contracts with compulsory physical delivery”
What is the time can i close my options on monday, can i close at monday at closing time??????
Can some one guide me on this… Really got panic
Don’t panic sir,if you have F&O contract which is in the money than you need to maintain 100% margin Example: If you have Federal bank contract 95CE 1Lot,CMP100Rsx7000Lot size you need to have 7Lacs in your Zerodha trading account else your contract may get auto squaredoff (50/50 chance) .else if it is OTM than you can wait and watch but once it goes ITM you have to maintain the margin.For ITM contracts the margin will be used for taking physical delivery of shares in case you are waiting and watching till expiry Thursday 3.30pm. Recently introduced by SEBI to prevent huge speculations in the expiry week.
I am getting text messages as well as mails regarding compulsory physical delivery stock holding. I am holding Reliance, Coalindia and RBLbank option calls, I don’t see these stocks are in compulsory physical deilvery, but getting mail/message of having a open position of compulsory physical delivery stock, I don’t know which of the mentioned stock is in compulsory physical delivery let me know.
RBL Bank is in physical delivery, which is why you are receiving the email/SMS notifications.
can I square off itm option on Monday in expiry week will there be any penalty for this
I’ve dabur, indusindbank, yes bank , rbl bank OTM CE options. What happens if they expire OTM on expiry day. What if I close my positions on Monday.
Pls guide… Thanks
Shyam, If they expire worthless on expiry day, there won’t be any physical delivery obligation.
Double Counting Error :
I can see from my ledger that you are charging double for the physical delivery stocks.
i.e. You are charging 40% of contract value (accepted and valid), but on top of that you are also charging SPAN and Exposure as well on the same contracts. So this is resulting in double counting of Margins….. Please can you clarify
We charge SPAN+Exposure or 40% of the contract value, whichever is higher(For most contracts, the SPAN+Exposure is lower and we charge 40% flat). On the ledger, you will see 3 debits-SPAN, Exposure and ASM margin for physical delivery F&O positions(i.e., 40% minus SPAN+Exposure).
Can you recheck the ledger and confirm?
I received an email from zerodha about physical delivery of options. I’m in panic. Could you please tell me what should I do. I purchased below options in NRML mode a week ago…
1. Bank of Baroda, Jul 155 CE
Current spot price is: 118
2. ONGC, jul 162.5CE
Current spot price: 146.65
3. Sun Pharma, Jul 450CE
Current spot price : 430.25
4. TCS, Jul 2280 CE
Current spot price: 2109.
(a)Can i hold ONGC, Sun pharma, TCS till expiry since these three are not in physical delivery list.
(b)Should I sell Bank of Baroda tomorrow or can I wait till Thursday.
Please provide me your inputs. Thanks in advance..
a. These contracts will be cash-settled, there won’t be any physical delivery obligation for now.
b. Since the strike is deep OTM, it is highly unlikely that you will find a buyer for your position. The contract will expire worthless if BoB remains below 155 till Thursday.
Your answer made me cool.. Thanks a lot..
Suppose if i buy call and put both for a particular stock , what will be the margin requirement as per new SEBI policy of physical settlement.
If the stock is being physical settled, you will be charged additional margins as mentioned above.
Is the margin requirement to hold ITM option on the last 4 days applicable to Nifty n Bank nifty too?
Nifty and Banknifty(index contracts) continue to be cash-settled, so there won’t be any physical delivery obligation.
is zerodha allow to trade in(i.e. to buy) stock options which are physically settled in last week of the month??
i mean to say ….take fresh trades
No, you won’t be allowed to take fresh long positions from Monday of the expiry week. However, you can take short options and long/short futures trades till Wednesday.
May this is a old Post, but I think a correction is required in below line. “However, there will be STT charged on the long position(s) as this is treated as notional delivery.”. … I think it should be “STT charged on short positions” as STT is applicable sell side
Kiran, as clarified by the Bombay High Court, since there is a delivery of shares for the settlement, both the buyer and the seller of the contract are charged 0.1% of the contract value as STT just like a normal equity delivery trade(This is mentioned in the additional costs of physical delivery).
Sir, I have taken yes bank 29 Aug 19 future short @80 and buy [email protected] and shorted [email protected]
1. How much margin i need to maintain for this hedge position in expiry week?
2. If expiry of yes bank happen at RS. 75 that time my future and 70ce are in net off position and 65pe expire worthless giving me full premium. Then for this net off position of future short and 70ce physical settlement will compalsory or it will net off?
I have the following open positions:
1. IDEA AUG CE with strike price 8. Idea spot is currently at 5.75.
2. I am long BANKNIFTY AUG FUT which I bought at around 28463 and I also purchased a BANKNIFTY AUG 28400 PE as a protective put to reduce the downside risk.
Today, I suddenly get this mail with subject: “Positions in contracts with compulsory physical delivery”.
Now, my question is,
A) Does this physical delivery compulsion apply to BANKNIFTY? I think not because index futures aren’t physically deliverable as far as I know. So is it safe to assume that the BANKNIFTY FUT AND PE would be cash settled upon expiry?
B) Where do I stand with regards to IDEA CE? It is an OTM CE as of now. Will it be squared off automatically on the next trading session? Because I don’t think I have the necessary margin requirement. Also the F&O margin calculator of ZERODHA doesn’t show the SPAN and Exposure margins required for long options. It only displays margin requirements for short options.
Kindly advise as to what I should do avoid to avoid catastrophic damages. I have no intention of purchasing the stock and the purchase of the IDEA 8 CE was purely to benefit from premium rise if any prior to expiry. Awaiting reply.
Abudhar al Hassan.
A. Your right, Index F&O are cash-settled, this applies to stock F&O only.
B. The margin requirement will be 40%, 50%, 60% and 80% of the contract value as mentioned in the post above.
If your position remains OTM, it is unlikely to be squared-off due to unavailability of counter parties.
I have YES BANK AUG 65 CE options sell in my name. Today I received a mail stating complusory deivery and all, I dont know anything about it. What I have to do now. Can I buy and settle tomorrow. Please reply i am really tensed up.
I hope you have exited your positions on Monday.
The timing of the mail is grossly wrong, even I couldn’t sleep over the weekend as I had close to 5 contracts in RBL bank which is part of physical settlement.
This mail ideally should get trigger on the wednesday or thursday of the 3 week so that newbies can exit their positions on last friday.
I exited all my positions on Monday to avoid margin block but it was a heck of a weekend as I was worried about liquidity in the contracts.
your EQ margin utilization has reached 2642.63% of your available balance. Add funds on kite.zerodha.com/funds immediately to avoid square off.
What does this means .?
Harman, if you have physical delivery positions, the margin blocked is higher during the expiry week, which would have led to your account balance going into debit. This is the margin call SMS that would have triggered for the same.
Why my order was executed prematurely. This has incurred loss to me. The exchange is still active and I have sufficient balance to cover any exigencies.
Who’s responsible for this loss.?
Puja, our team would have squared-off your position if there was insufficient margins to fulfil the physical delivery obligations. Please check the funds’ page on Kite for the same.
Also, do create a ticket on support.zerodha.com if you have further queries.
hi kindly tell me what will happen to puts in rbl bank which will expire with zero value,,
Kamlesh, if it expires at 0, there won’t be any physical delivery obligation.
I bought a call option NBCC 50CE
Now it is trading at 37.It is OTM. Can I take physical delivery please suggest me.
As long as the contract expires OTM, there won’t be any physical delivery obligations. However, additional margins will remain blocked till the expiry day.
I am buy in DLF sep 150 PE in position what effect in my options?
I have ashokley land 50pe of 6000 lot and expiry is on 26 sep 2019. Will i have to take compulsory delivery or i can square off my position as i dont have enough margin.
As long as the contract expires OTM, there won’t be any physical delivery obligations. However, additional margins will remain blocked till the expiry day
I have 80 pe tata motors and current price of stock is 133
What happened if i am unable to square off my position till expiry day
Should i compulsory to take delivery of shares in demat account with paying money??
I have shorted JustDail Sept Future and also I have bought Justdail Oct Future. Now I have got a mail from Zerodha for mandatory physical delivery or maintain margin. My questions are,
1) Is margin requirement is for both Sept and Oct Expiry?
2) Do I need to maintain margin in my account before start of trading on Monday or by Monday EOD?
3) Do i get a chance to exit my positions on monday? If yes then till what time?
Thanks in advance.
1. The increased margin requirements are only for the current month(Sep).
2 & 3. It is ideal you have the margins at the beginning of the trading session. Our RMS team will square off your open positions based on how high your margin shortfall is.
Suppose I am:
Short 1000 PE 2 Lots (means 2 Lots Long)
Long 1100 PE 1 Lot (means 1 Lot Short)
How would it be settled on expiry day ? Gross Qty or Net Qty ?
Physical Delivery of no. of shares equal to 1 Lot (net) ?
Only the net quantity will be physically settled after net-off.
1 lot of take delivery position in your case.
As per the new SEBI rules regarding derivatives settlement with physical shares,if someone holding 500 shares(current lot size) of HDFC Bank and intends to sell a call option on 1 lot of HDFC Bank,is any extra margin required or the stocks in demat account enough ?
You’ll need the exchange stipulated margin to enter the trade. Higher margins will be charged only during the expiry week.
Thank You for the info. Just need one clarification. In case I get called by the buyer of the option on expiry, will be stocks be debited from my demat or it will be handled with the margin money?
Your stocks will be debited to meet the delivery obligation.
I have bought tatamotors 170ce on Tuesday, do I have to take delivery or can I squareoff on Wednesday? Plz help, it will be much appreciated if you extend the timings of customer support, being No1 brokerage firm in India
From friday ownwards in expiry week…for long options are extra margins charged EOD and not real time?
As when placing order it just shows that the total premium needs to be paid and no other margin.
Please helped me.I forgot to square off my CRUDEOIL JAN FUT 2020 position as i came to know too lately that already crudeoil jan 2020 had been expired in 17 Juanuary 2020.Please helped me how to carry forward this contract or have to other?
The position will have been extinguished at expiry. If you want to carry the position forward, simply open a fresh position in the next month contract.