Equity Options physical settlements

[ShubhS9]

If both expire ITM, your position will be netted-off against eachother.

@Jayneeljeswani

At what prices will my long option will get executed after expiration? LTP or BID ASK rate?

The Options will be settled at Intrinsic Value.

Eg. You Shorted Tata Steel 400 PE and went long in 390 PE, if on expiry day Tata Steel closes on 385, your 400 PE will have Intrinsic Value of 15 and 390 PE will have Intrinsic Value of 5, this will be the settlement price.

@Jayneeljeswani

If the OTM option which I bought goes ATM and the ATM option which I shorted goes ITM will the Physical settlement take place of ITM put option which I sold in expiration?

ATM is equal to ITM, in this scenario your position will be netted-off against each other.

@Jayneeljeswani

4)If I don’t exit my credit spreads trades in last 2 days will there by any hike in margin requirement?

Yes, your margin requirements will increase for the last two days of the expiry. You can read this post for more details.