ITM options Index options - Expiry - Brokerage/STT?

F&O
1

Lets take todays example (24/08/2023) and I bought 3000 quantity (60 lots) NIFTY 19500 PE at 50 Rs in the morning and the NIFTY on expiry closes at 19400. This is NOT closed and left it to expire at 100 Rs, as NIFTY closed at 19400.

For this trade:

  1. What would be the STT charged on this trade?
  2. Would there be any brokerage charged by Zerodha while settling this trade, if yes, how much would that be?

@ShubhS9

2

As per the scenario given, the option expires at ITM. Based on this moneyness:

STT on exercised contract = 0.125% of intrinsic value = 0.125% * 3000 qty * 100 = Rs. 375

Whenever options expire at ITM, a brokerage of Rs. 20 per order applies to both sides—i.e., the entry trade and the exit, which is settled by the Exchange.

3

Thanks so much for the replies.

Is my understanding correct, mainly the brokerage part?

  1. STT will be on the total intrinsic value and not just the 50 Rs. profits?
    (0.125/100) * 3000 * 100 (Intrinsic value) = 375

  2. The reason why I asked about brokerage was, as there are 60 lots or 3000 quantity, while exercising the brokerage will be per order and order basically will be 3000 / 2 (as max quantity that can be traded is 1800), so exercise brokerage is 40 Rs.?

Appreciate the clarification.

@ShubhS9

4

Right. STT will be on the intrinsic value not on the profit.

Brokerage will be Rs. 20 per order. Taking the above example, since the quantity held is over the freeze limit, it’ll be 2 orders, so brokerage will be Rs. 40.

5

@ShubhS9

Thanks for confirming STT and the brokerage part, that it will be Rs. 40 as this quantity in example (3000) would required two orders, as the quantity is above freeze limit.

Appreciate your help.

6

@ShubhS9

If the Nifty weekly Call option expires ITM, on what day will the (Profit - STT) be credited in to my Zerodha trading account.

7

Settlement cycle for F&O is T+1, the profit minus charges will be added to your account balance on T+1 day.

8

That is, if Nifty expires on Thursday, and Friday is market open, the profit minus charges will be credited to my trading account on Friday??

9

@ShubhS9

One last query.

Since i will be allowing the Nifty weekly ITM option to expire, will NSE charge me, or ask me to fund my Zerodha trading account with any of the following;

  1. Penalty for letting the option expire; or

  2. Margin money; or

  3. Total value of the option contract.

In short, will the net profit be automatically credited to my trading account, or are there any charges.

Thanks.

10

Hi @Abhijit_Sen1

Explained here

Yes. That’s correct

11

@Meher_Smaran

Sir

I read the article very minutely. It only talks about STT. My final query remains unanswered by the article.

" Since i will be allowing the Nifty weekly ITM option to expire, will NSE charge me, or ask me to fund my Zerodha trading account with any of the following;

  1. Penalty for letting the option expire; or
  2. Margin money; or
  3. Total value of the option contract"

Kindly help clear my final query

12

Since index options are cash settled, there won’t be any penalty.

13

@Meher_Smaran

Thanks a lot