Futures physical settlement

Hi @ShubhS9
I had bought futures 1 lot of [email protected] 1324 and on expiry it closed at 1287. I had planned to take physical delivery on expiry. I had enough funds to the tune of the contract value itself through out the period. Now I notice that the futures loss of approximately 20000 has been booked to my account. How is that possible? I am taking delivery of the stock in any case with the funds available in my account at all times. Can you please explain this.

Futures are marked to market, means any profit or loss you make for the day is settled on the same day and credited to / debited from your account.

You can learn more about this in detail here.

As you were holding Long Futures position, you are obliged to take delivery of the shares, the shares in physical settlement will be delivered to you at the settlement price on the expiry date. Explained in detail here.

Which would mean that despite taking delivery through physical settlement you would end up making a loss in the futures position.

if futures weren’t marked to market you would be making that much loss on shares… only difference is it would be unrealised loss, either ways it doesn’t make any difference…

So in this situation would it be better to rollover the position or take physical delivery in terms of cost.

physical delivery is costly imo… if you want to buy shares better do it from market, rolling over or exiting your trade is better option.

What happens in case of covered call options? I hold 1 lot of AMBUJACEM. The CMP is 262. I sold the 270 call option. On expiry If the stock price moves to 270 or above and I have to give physical delivery, do I have to still incur the loss on my call option trade?

You will get to keep the entire premium received for your Short Call Option and will have to deliver underlying shares at Rs. 270 if underlying expires above 270.

Does the same hold good for cash secured put options also. I sold TATAPOWER JAN 80 PE. I intend to take delivery of the same. What happens to the put option if the stock expires below 80? And I presume I have to take delivery at 80 rupees.

If the Option expires ITM, you will be obliged to take delivery of the underlying shares.

You’ll get to keep the premium received, and will have to take delivery of underlying shares at Rs. 80.

What if it expires ATM?

The option contract needs to have some intrinsic value to be considered ITM. For example, say stock X closes at 100.05, call options of strike 100 and above will be ITM(intrinsic value of 0.05).