Delivery is only if you don’t square off before expiry
Else it works like it does now
Ideally u should do that, unless you specifically want delivery of stock
Else you’ll need 5L amount or whatever is the value of equity, in ur acc, to receive actual delivery of stock
This SLB thing looks similar to US sub-prime mortgage market. First casualty of the US sub-prime market crisis was Lehman brothers!
In India on any crisis, every retail trader might become future VijayMallyas but escaping to Thailand/////
Better Sebi also ban Thailand travel fr retail traders frm now onwards…
Taking delivery is not the only issue here.
Huge upfront margin requirement for both buyer/seller(in order to manage the risk of non delivery/not taking delivery) .
Seller additionally need to shell out dividend to stock lender( if paid by co during trading period),
Interest on the borrowed stocks
Additional transaction .Exch transaction charges /DP charge will increase a lot.
More taxes for government in case of delivery.
So the idea is everybody want to feast on the trader. That is not going to end well.
@Shubh if this comes through, you can always sell a contract instead of deciding to exercise. So sell on the market instead of letting it stay in the account.
Hey Nithin,
I can definitely square of the future contract for this month and take the next month contract.
But the issue is when I trade in options and futures of the same underline together to hedge my risk.
Choosing not to exercise would have given me that benefit.
Only two days back we discussed about how new trading opportunities will emerge with changing in STT on exercised options changing from this expiry.
If STT benefit was given to option traders,so I will choose not to exercise the options during expiry and roll over the future contract.
In that case what happens? When do i need to bring in the funds to take a delivery of the Stocks?
Firstly this is just a discussion paper, we have no clue if it will be implemented and if it is how it will be. Like in commodity markets, there is compulsory delivery period, maybe something like that will come through for equity as well. So if people don’t close out positions on a particular day, the next day onwards they can be assigned delivery. Also to hold positions in the compulsory delivery period, margins are made much higher. If physical delivery is assigned, then the person is required to bring in entire money.
What was done about STT on exercised options was more like a quick fix. Don’t think you can mix both these.