Clarity regarding Net off positions in F&O

[shivraj]

Please help in getting clarity on this situation
If I have two positions in options as follows:

1. one Put option short 300 strike
2. one call option short 270 strike
   spot at expiry is 298. Now put option is CTM and exchange have all the rights to assign it or not because do not exercise policy has been terminated. Now suppose exchange do not assign it. then it will be worthless and not physically settled just will be treated like OTM option.Now tell me what will happen to call option in that case will it be net off or not?

[ShubhS9]

@shivraj

Now tell me what will happen to call option in that case will it be net off or not?

It will not be netted off and you’ll have to give delivery of underlying shares. There’s a post explaining similar scenario:

Physical settlement of f&o position

Dear @nithin , If there is one long and one short in f&o of same underlying of a stock, which became netted off as regards to physical delivery. But what if one leg is CTM and other party of that leg do not exercise the options ?

[Nsingh]

Dear @ShubhS9 , as of now sebi withdraw his ‘do not exercise’ policy from 14th October 2021, Is am i right?

[ShubhS9]

@Nsingh

as of now sebi withdraw his ‘do not exercise’ policy from 14th October 2021, Is am i right?

Yes, they have. You can learn more on this here:

All you need to know about the DNE (Do Not Exercise) Facility Discontinuation

On Sep 29, 2021 NSE issued this circular announcing the discontinuation of the DNE (Do not exercise) facility. The DNE facility was introduced in 2017 to overcome the STT trap (rationalised from Sep 1, 2019). However, DNE was also an important risk management tool especially in the wake of compulsory physical settlement of stock options. The removal of the DNE facility has increased systemic risk for all capital market intermediaries. STT Trap Earlier, STT was levied at 0.05% on the premium w…