Futures Short Delivery

F&O
1

Hi All, I have a short futures position which I forgot to close today. Most importantly I do not have the share in my demat so I can’t deliver the underlying. In this situation, how will my contract be settled? I understand I should have closed the position but I could not. whats the worst that could happen to my account?

  1. will my pledged shares be un-pledged and sold?
  2. do I need to bring more cash?
  3. will it go through auction?
2

@pnsudesh

  1. All positions that result in you having to give delivery of shares will require you to have shares in your demat account equal to the deliverable quantity. In the event that you do not have the required quantity of shares, this settlement would result in a short delivery. Appropriate penalties shall be charged on such short deliveries. This can be as much as 20% or more. Read more on the consequences of short delivery here.

Check this link to know more

1 Like
3

Thanks @Kalpesh. My account has now been blocked margin for stock short future settlement which is around 9L for 1lot. And I had another put option which was ITM on expiry for which around 2L is blocked for delivery. Let me see how this gets settled.

4

@Kalpesh Sorry to tag you in here. I just looked into the futures settled PL on console and found that the short futures were bought back at the 29th Jul settlement price. Meaning the stock future I sold was closed on the final trading day’s settled price and it did not go through the auctions. May be this is how the short futures are settled.@siva could you clarify this please? thanks.

Based on the above, I believe the long puts (with no share holding in demat) go through auction but futures are closed (i.e bought) at the settled price.