Help on Physical Delivery on Expiry

[VM15]

Hi,

I need some help with physical delivery. Following is the scenario:

I have Tata Steel July CE Spread of 119 Buy and 120 Sell.

1. If stock price is below 119 , both CE are OTM and I do not have to pay for any delivery. Is understanding correct?
2. If stock price is between 119 and 120, 119 CE Buy strike is ITM and 120 CE Sell strike is OTM. What will happen in this case?
3. If stock price is above 120, then both strike are ITM, what will happen in this case? Do I need to take physical delivery or not?

Thanks
Vipul

[Meher_Smaran]

Hi @VM15

@VM15

If stock price is below 119 , both CE are OTM and I do not have to pay for any delivery. Is understanding correct?

Correct

@VM15

If stock price is between 119 and 120, 119 CE Buy strike is ITM and 120 CE Sell strike is OTM. What will happen in this case?

In this case, Net off is not possible and you have to take delivery for your 119 CE buy

@VM15

If stock price is above 120, then both strike are ITM, what will happen in this case? Do I need to take physical delivery or not?

In that case, Net-off happens

You can read more on physical delivery here : What is Zerodha's policy on the physical settlement of equity derivatives on expiry?

[VM15]

Thank You Meher. It helps.

Thanks
Vipul