Carry Forward of NIFTY Index Option Trade: Queries


On the supposition that I book a NIFTY Call Option Trade in December/January (with some ‘X’ Strike Price) and I pay the margin for getting into the trade (say one Lot Size (75)* Premium prevalent now), apart from the margin, do I get charged with anything else?

Query – 1

When the option trade carries forward to next day and the next day and so on, depending on volumes and other factors the premium of the option increases or decreases, so the maximum loss for me (just in case the trade goes bad) is the “INITIAL PREMIUM/MARGIN” i had paid, right?

Query-- 2

Can anyone slightly elaborate on how the carry forward of the option trade works, there are no hidden costs, penalties or anything right?

Like I book a normal NIFTY Index Call Option Trade with NRML attribute and the leave the trade at that until expiry or some weeks before expiry?

Can I square off the option trade before expiry? or is it mandated to be done on expiry only?

Please can anyone elaborate a bit?

I had gone through the varsity module and it was great.

Brokerage and other charges, other than this there are no charges.

As the buyer of Option, your max loss is limited to premium paid.

When you are trading Options, especially taking Short positions the potential penalties can arise from margin shortfall, can read this for more.

Other than this if your Long Option position expires ITM, there is extra STT charged at 0.125% on Intrinsic Value of the Option.

There are no penalties for holding your position until expiry, or letting it expire.

Yes, you can square-off your position anytime before expiry. Not compulsory to hold it until expiry.

You can explore F&O topic further more, you will get lots of information.

Another query sir-- this pertains to Stock Option Trading.

Assuming I purchase ITC Call 190 CE November expiry at premium 10 (assumption), the margin to enter into the contract is

3200*10= 32,000 for one lot

I purchased one lot (assumption)

Two days later the premium moved to 14 (some drastic announcements etc)

3200*14-32000 is my profit for my one lot contract right?

If such is the case can I immediately sell the contract and exit the contract and since I am no longer in the contract " I wouldn’t liable to physical delivery of shares, right"

Is my understanding correct?

Physical delivery of shares happens if one holds the contract until expiry or some two days before expiry? When is the last date for any stock?

Please can you elaborate sir.

Thanks and Regards.

Thanks a lot sir. Your replies were informative.

I have a couple of queries.

Assuming now, I purchase a December Index PUT OPTION (NIFTY), do the same rules apply with respect to carry forward and the like?

The least premium it can go to is 0.05?

" When you are trading Options, especially taking Short positions the potential penalties can arise from margin shortfall"

Can you elaborate on this sir, please?

Query- 2)

If I purchase a BANKNIFTY Call or PUT Option for December expiry and leave it until expiry, the maximum loss that is incurred is the premium/margin too, right?

However, is it the same principle, if our premium of the contract is in the green (profit zone) then we can sell the contract before expiry. (cash settlement happens in T+1). There are no further liabilities later, right?

Please throw some light on these queries of mine, sir.

Thanks and Regards.

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Physical Settlement happens only when Option you hold expires ITM, Expiry is on the last Thursday of the every month.

Index Options are cash settled, there is no concept of physical delivery.

As I said above, if you are Option buyer, your loss is limited to premium paid.

When you short Option, there is SPAN + Exposure margin blocked, failing to maintain adequate margins can result in margin shortfall and square-off of your position.

Yes, maximum loss you can incur is the premium you paid.

Yes, you can square-off your position before expiry, and there are no further liabilities.

Thanks a lot sir.

“When you short Option, there is SPAN + Exposure margin blocked, failing to maintain adequate margins can result in margin shortfall and square-off of your position.”

This is mentioned by Zerodha like (margin required on the left side of the mobile app) before taking the position in the option and if the trader doesn’t have the requisite margin, then he/she cannot take the position right sir?

Is shorting option equivalent to buying a PUT Option?

I know that buying either call or put option, the maximum loss than can be incurred with carry forward of the option until expiry is the margin/premium paid, but “SHORTING OPTION” terminology confuses me a bit.


On the Kite application (mobile) or Web sir, we can see some options as “NIFTY 11000 CE” (this is monthly expiry right?)

and some as “NIFTY 10500CE (w)” (w–> weekly expiry right?))


I purchased a single lot of Reliance Options by paying upront margin.

Spot Price of Reliance= 100 (Assumption)

Premium= 10 (Assumption)

One Lot Size= 5050

Intra day premium becomes 12, so the crucial question is: " I can exit the contract and make the profit (505*12-50500), right?"

Assuming I carry forward the next day and the premium is 14 and I exit the contract then, then I can exit the contract right with no physical delivery of shares or anything sir?

The charges incurred on the profit would be brokerage, STT, and other exchange related charges right.


Sir, can you tell in which scenario the liability of physical delivery for a Call Option arises in stock segment? Is it if I don’t exit the contract until the last day of the contract or two days prior to the expiry date?

Thanks a lot sir and Regards

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Technically yes, Shorting Call Option is same as Buying Put, in both scenarios your view on the direction of the market is bearish.

But thing with Shorting Option is, if market moves against your direction the potential for loss is undefined as there is no upside to how much the price can rise, while when you Buy Option your max loss is limited to premium paid as price can’t go below 0.

Selling Options has been explained in the Options module on Varsity, do give it a read.


Yes you can exit.

If you exit before expiry, there is no physical settlement.

Right. You can use the Brokerage Calculator to calculate the charges.

The scenario of physical settlement arises when your Option position expires ITM.

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Thanks sir on the replies.

Main Query

My apologies for asking sir but Zerodha (or any broker) charges interest for using margin money whilst entering into an Intra-day trade or an F/O Trade? or is it just the brokerage and other exchange fees as mandated by the exchange.

Query–1 (Scenario)

I buy the following option (supposition)

Reliance: 2200 (one share price)

Premium: 10

One lot: 505 shares

Margin to be deposited for one lot, say, i bought one lot at 9:30 AM–> 5050

at 11:55 AM, due to some events premium increases to 15

505*15-5050= Gross Profit (I exited the contract and from this gross profit I pay brokerage, etc etc)

Now if since this an ITM option while I was exiting the contract, the concept of physical delivery doesn’t arise, right?

Assume i carried forward the option to next day and the premium became 30 and my profit increases and I exit the contract without fear of physical settlement, right?


But, how does the scenario of physical scenario not arise when my option is Deep in the money?


Only brokerage and other charges, there is no interest charged for using leverage for Intraday trading.

No physical settlement obligation in both cases. To make it more clear for you, Physical settlement only happens after contract expires, not before that.

The Options which are traded in India are European Style Options, in these Options the obligation of physical settlement arises only once contract expires, not before that.

So, if you exit your position anytime before expiry, there is no obligation for physical settlement.

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Look bro…
As a option buyer( means for long options
position) u have the right not obligation to execute the contract …its depends upon your will whether you want to execute the contract or not… To take physical settlements for stocks and cash settlements for indices…upto expiry…

Anytime before expiry if u want u can execute the contract for cash/physical settlements or square off the position by selling it with a loss or profiit.

But if u hold the contract till expiry…and you didn’t square off the position before that… Then their will be a settlements happens…if it still remains ITM…

Now my quarry is:-
Sir if our contact remains OTM at expiry… Then also settlements happen or it will square off with a loss…

You help can make wonders :pray::pray::pray:

If your position expires OTM, it will expire worthless. In this scenario there will be no physical settlement.

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Thanks sir.

If I put in an options trade CE or PE , either index or stock, the next day the premium increases, I exit the contract, the premium along with profits will be credited to my account right ( excluding brokerage among other charges)

Similarly if I book loss, the loss amount plus brokerage etc will be deducted from the premium or margin that’s withheld is deducted and credited backed to the account?

Thanks sir.

You are correct.

Thanks so much sir.

Yesterday if I had booked an index option at some premium (100), NIFTY, so margin i should pay to enter into one lot (75) of the contract is 7500, so
for carrying overnight this position

Query-- 1

Do I need to maintain any additional SPAN Margin, Exposure Margin or something? Is there any SEBI derivative?

There won’t be any SEBI or Zerodha penalties at the end of the expiry month, right?

Query-- 2

The initial margin of 7500 is enough to carry forward the position till expiry, right?

Query-- 3

The SPAN, etc is for Option Writers, and this is blocked at the Exchange level, right?

Thanks and Regards

For buying Options, you don’t have to maintain any SPAN + Exposure margin, this is needed only when you Short Options or trade Futures.

There won’t be.


Yes, the SPAN + Exposure margin is blocked at Exchange level. It is for Option Writers and for Futures.

Thanks so much sir – I sincerely appreciate your responses.

I had booked a couple of trades-- NIFTY Index Oct Monthly Expiry and BankNifty yesterday-- it carried forward for one day.

For these one day, to get into the position, I had payed “X” amount of premium, and they carried forward today, and today I exited the two contracts in profit.

I see Used margin is in negative and Options premium is in negative…Can I know what’s this?

Is the profit after accounting for brokerage+ taxes will be added to my available margin (since i exited the contracts, the premium I initially deposited and the premium with which the contracts are exited constitutes profit-- so this profit+ the premium will be added?)

I feel the premium is immediately added upon exiting the contract.

There aren’t any penalties or anything right since I didn’t held the contract until expiry, right?

Can you address these queries sir?

Thanks so much.

Explained here.

Brokerage is calculated and charged at the end of the day. Yes, when you exit your position premium you paid + profit will be credited to your account.

There are no penalties.

Sir, thanks a lot. I am unable to navigate to the link.

Can check now.

Thanks so much sir, and sincerely appreciate your responses…

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