Are Nifty future options cash settled on expiry (last Thursday)?
If yes, it is fair to say that there is no early assignment risk before expiry like US equity options, correct?
Are Nifty future options cash settled on expiry (last Thursday)?
If yes, it is fair to say that there is no early assignment risk before expiry like US equity options, correct?
Yep, all options in India are cash settled and all of them are European (which means that they can be exercised only on the expiry day).
Due to recent changes in SEBI policy of Trading Futures & Options, I had few questions with regards to Margin in Options :
A detailed explanation with an example will help. Thanks.
Okay. But still my doubts stands to be not clarified. An example would help. Just looking at the F&O Margin Calculation will not help. I need to understand it thoroughly.
I presume you are referring to compulsory physical delivery of the 46 Equity derivative contracts?
1 & 2.Long options will attract a margin block of 20, 40, 60 and 80% of the VaR +ELM margins of that stock. For example, RCOM has a VaR+ELM of 23.22%. On E-4 day, the delivery margin will be 20% of the VaR+ELM which is 4.64% of the contract value. If you have RCOM 17.5 CE, you will be required to have Rs 22,755 (20% * 23.22%(VaR+ELM) * 28000(lot size * 17.5(Strike price)).
There will be no margin block in the preceding weeks. The margin block is applicable only 4 days before expiry.
3.While you will continue to receive the margin benefit by a reduction in the SPAN margin, there will be no benefit in the physical delivery margin charged for the long option contract
You can read our policy on the same here
Since your queries is just about Nifty F&O, there are no margins for long options other than the option premium paid while entering the contract