Long stock options in expiry week

[AmitUM]

@nithin @siva @Venu.Madhav @Nakul Zerodha’s policy on physical settlement of options contains the following statement:

“Fresh long option positions will not be allowed on Wednesday and Thursday of the expiry week”

What if I already have a short position (which is ITM) in the same underlying and the purpose of the fresh long (also ITM, but at a different strike price) is only to net off against the short? There is no fresh delivery obligation created, infact, the existing delivery obligation (short) is only being netted off. Will such a long position be allowed on Wed and Thu of the expiry week?

[U_will_die_once]

Existing position you can square off. Only fresh positions aren’t allowed🙂

[AmitUM]

My question is about taking a fresh long position at a different strike price on the same underlying to net off against an existing short, and not about squaring off the existing short itself,

[Ragavendran_M]

You can take a fresh future position by paying two times of NRML margin to net off the existing short position.

[AmitUM]

Thanks. You’re right. A fresh future position seems to be a better approach than a fresh option position in this situation.

@nithin @siva @VenuMadhav @Nakul Can someone from Zerodha kindly confirm the below:

1. Am I allowed to enter into a short future contract on a stock during the two days of expiry (Wed and Thu of expiry week) despite the applicability of compulsory physical settlement?

2. Since the short future contract would net off against the existing short ITM PE, it will not lead to a fresh physical delivery obligation, but infact net off the existing one. Will the margin still be twice the normal margins on Wed and Thu of the expiry week?

3. Just checking again on the earlier question raised (although theoretical): Ideally a fresh long ITM PE that nets off an existing short ITM PE does not create a new delivery obligation, but nets off an existing one. Is it still disallowed on Wed and Thu of the expiry week? Will additional physical delivery margins still apply on such as netting off position?

Grateful if the above doubts can be cleared.

[siva]

@AmitUM

• Am I allowed to enter into a short future contract on a stock during the two days of expiry (Wed and Thu of expiry week) despite the applicability of compulsory physical settlement?

You can with double the margins.

@AmitUM

Since the short future contract would net off against the existing short ITM PE, it will not lead to a fresh physical delivery obligation, but infact net off the existing one. Will the margin still be twice the normal margins on Wed and Thu of the expiry week?

Yes, still it will be twice.

@AmitUM

Ideally a fresh long ITM PE that nets off an existing short ITM PE does not create a new delivery obligation, but nets off an existing one. Is it still disallowed on Wed and Thu of the expiry week? Will additional physical delivery margins still apply on such as netting off position?

Fresh longs are not allowed in options on last two days.

[AmitUM]

Thanks. Truly appreciate the quick revert.