Hello Folks,
If i sell Deep ITM call and if i do not square off the same before the expiry . What will happen in the above mentioned scenario .
Depends on if you have taken position in Index Options or Stock Options.
Index Options are cash settled, so your ITM Call will expire at Intrinsic Value and any profit or loss arising will be credited to / debited from your account.
Stock Options are physically settled, upon expiry for Short ITM Call you are obliged to deliver shares, so on expiry day you need to have shares equal to lot size of Stock Option in your Demat account, otherwise it will result in Short Delivery are you will be penalized accordingly.
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Can u explain that if my position is in the money and i am short and there is a seller circuit , making impossible for me to cover my position what will happen in that case … ( i am talking abt indicies option)
Index Option are cash settled, On expiry day, if your Option is ITM and you don’t square it off, the Exchange will settle it at Intrinsic Value, and any profit or loss arising from that position will be credited to / debited from your account.
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Hi @ShubhS9
If I buy 1 lot of ATM Stock Option, ex: DMART CMP on 3 Mar 2025 was 3400 & DMART MAR 3400 CE price 100.
Current Date 22 Mar 2025, DMART CMP: 3910, DMART MAR 3400 CE price at 480, with No Liquidity as it went Deep ITM from ATM, and could not square off on expiry day.
Is ITM Option Buy is Cash Settled like Index Option or Exchange will buy DMART 150 Shares at 3400 Price and credit in my Demat Account?
When ITM Short CALL option contract is exercised on Expiry day, we need to give physical delivery of stocks from our Demat Holding to broker for physical settlement. Is giving physical delivery of stocks consider as Capital Gain/loss or F&O income?
As Giving physical delivery from Demat Holding is considered as “Sale of stocks”.
So, is it needed to report in ITR as Capital income or F&O income ?