Dear @nithin
Is sebi working on devolving of stock options into futures one day before expiry? as commodities market works. If yes, by what time frame we expect the same?
Thanks.
All stock Futures & Options (F&O) contracts traded on Indian exchanges mandate compulsory delivery. If an individual holds an in-the-money (ITM) stock option or a futures contract upon expiry, they are obligated to either deliver or receive the underlying stock. Out-of-the-money (OTM) stock options, however, expire worthless and do not entail any delivery obligation. In contrast, index F&O contracts are settled in cash.
Read details here What is Zerodha's policy on the physical settlement of equity derivatives on expiry?
Discussions are ongoing, and the exchange will notify us if any decisions are implemented.
Suppose if i buy a call option (OTM) of a particular stock and it become (ITM) and i didn’t square off , i have to take delivery. incase if i don’t have enough money in my account how much penalty they will impose on me and what about the profit i made on that call option. KIndly explain
All ITM stock options that are held till the expiry are exercised. The exit price used is 0 for the P&L, as the stock delivery happens at the strike price.
Holding a “take delivery” position post expiry without sufficient funds in the trading account will lead to the account going in debit. An interest of 0.05% is charged on the debit balance. This can also mean that Zerodha’s RMS team will sell the stock to make good of the debit balance in the account. Read all the details here.