FnO margin against holding


Does trader automatically get margin for FnO position if the trader has the underlying stock in holding?

For eg, if I have ITC holding qty >= ITC Call lot size will I automatically get margin benefit on a ITC SHORT CALL?

What happens if I have less than lot size in holding, say 80% of lot size?


Holding underlying shares doesn’t give you margin benefit if you take position in Derivatives.

If you want to use those shares as margin for F&O, you will have to pledge the shares. To know the process of pledging shares, you can read this.

@ShubhS9 thanks for your reply.

Then how does exercising the option work? If a SHORT CALL expires deep in the money, wont the share be sold from the trader holding?

Yes, if your Short Call position expires ITM, you will have to deliver underlying shares, to ensure there is no Short Delivery you should have sufficient quantity of the underlying shares in your Demat account to deliver.

Also, if you have pledged underlying shares for collateral, you will have to unpledge these before expiry day so these are available for delivery.

You can learn more about Physical Settlement here.

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thanks @ShubhS9

i did read the link you sent. i want to be clear, the trader needs to just have the share qty of lots size equivalent of the ITM contract(s). that’s it. if the strike, on expiry, end in ITM and it gets assigned by random assignment, Zerodha will take the shares out of the DEMAT account and forward to the exchange.

In other words, the trader doesn’t have to take any action to make sure the shares from his/her DEMAT account is taken, to satisfy the assigned contract(s), and that the trader will not have to pay penalties for not presenting his/her share for delivery.

As a trader you do not have to take any action, you just have to maintain shares equal to lot size in your Demat account to deliver underlying shares or maintain sufficient funds in your account to take delivery of underlying shares.

Any update on “selling shares/MFs without un-pledging them?”

@ShubhS9 thank you very much for your replies.
One last question, how long do it take to un-pledge shares? If my margins are covered and i un-pledge at 15:30 hrs on expiry day will that be enough time for Zerodha to satisfy any requirements that may arise due to random assignment?

The cutoff time for an unpledge request is 2 PM, if you place an unpledge request before 2 PM shares will be available the next day, if you place an unpledge request after 2 PM, it will be processed the next day and shares will be available the day after that.

To fulfill your physical settlement obligation, you will have to place unpledge request before 2 PM at least a day before expiry day so shares will be available for physical settlement on expiry day,

@ShubhS9 thank you!

Any update regarding selling holdings without un-pledging them?

We are working on this, can take some time.