Suppose I am writing put 65 strike idfc 9725 qty for July 25
and suppose price falls below that before expiry
so in India options are european style of american ?
I guess it will only assigned on the expiry day?
Does Zerodha force close in the money options on the last day like some other brokers do?
Right now margin requirement is about 70k
I believe margin req. will be increased in the last week of expiry?
Can someone point me to correct table as how much it will increase on Monday expiry week
also when do I need full cash in my account on the day of expiry or one day before that?
@Bhuvan @nithin_kumrr
Hey @curiousvi
In India, it’s a European-style option, hence physical delivery occurs only on the expiry day when the option is in the money.
There is no force close of any contract however there shall be warnings shared regarding the risk of physical delivery, margin increase when near to expiry.
You can check on this link regarding the margin requirement when it is near to expiry.
I just found there will be 0.25% brokerage if physical delivery? is this still true?
Yep, if your F&O position goes into physical delivery, brokerage is 0.25% of the contract value. But if it’s netted off, it’s 0.1% instead. The higher charge is due to the additional effort involved in handling physical settlement. We’ve mentioned it here.
Can you describe what additional work you have to do?
are not machines and software do all this?
Or you just say additional work so give some reasoning to charge extra?
What do u mean by netted off? example?
It might seem like everything runs on autopilot, but physical delivery comes with a bunch of checks and follow-ups behind the scenes. As expiry gets close, we’ve got to make sure margins are in place, funds or stocks are available. On expiry day, funds or shares are blocked in real-time, and if you don’t have enough, we try to arrange them or manage auction risks. Even after delivery, there’s still reconciliation and P&L work to ensure everything’s settled right.
So yeah, there’s effort and risk involved. Hence the charge.
Say SBIN is at 794 on expiry. You hold 1 lot long futures which means take delivery and 1 lot short 790 call which means give delivery. Both offset each other so no actual delivery. This is called netted off and brokerage is 0.1 percent instead of 0.25%.