If have NOV expiry ITM short call and long FUT left without exiting it today. I guess this is not a problem and I will get the difference intrinsic value as my profit. Is my understanding correct ?
I have PVR DEC expiry long FUT & PVR NOV expiry 1300 CE shorted at 40 premium. But today on expiry day, i left my short call without exiting. PVR closed today at 1311.85 and now this short call of 1300 strike price is CTM and so will it lead to short delivery ? What is the minimum fund for which it becomes short delivery ? As I have good cash in my account. Should i withdraw to avoid short delivery in situation ?
As you are holding Long Futures position and a Short ITM Option, your physical settlement obligation will be neted-off. Your Futures position will be settled at the closing price of underlying, and for the Short ITM position, you will get to keep the premium received when you took the position.
For CTM Short positions, the exchange does random assignment. If assigned you are required to have underlying shares in your account to deliver, not having underlying shares to deliver will result in Short Delivery. Appropriate auction penalties from the Exchange shall be charged on your account for such short deliveries. Read more on the consequences of short delivery here..
Short Delivery happens when you don’t have shares to deliver, to deliver these shares to the buyer exchange will hold an Auction, you should have funds in your account to cover the penalties which will be charged by the exchange.
To avoid Short Delivery you should have shares in your Demat account on expiry day. If you buy tomorrow this will be credited to your Demat in T+2 days ie. on Wednesday (Monday is holiday) while the shares from physical settlement have to be delivered on Tuesday.