# NSE has reintroduced DNE (Do Not Exercise) form April 28th 2022
**URL:** https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638
**Category:** Announcements
**Created:** [April 11, 2022, 2:15pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638 "2022-04-11T14:15:53Z")
**Posts on this page:** 20
**Page:** 1
### Author:  [@Bhuvan](https://tradingqna.com/u/Bhuvan)
#### Post date: [April 11, 2022, 2:15pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/1 "2022-04-11T14:15:53Z")
Last year, NSE had [discontinued DNE](https://tradingqna.com/t/all-you-need-to-know-about-the-dne-do-not-exercise-facility-discontinuation/121696). But with physical delivery, traders were suddenly on the hook if OTM options suddenly became ITM:
> The risk though comes from out of the money options that suddenly turn in the money on the last day of expiry. No additional margins are blocked for OTM options in the expiry week, and when it suddenly turns in the money, a customer with small amounts of premium and no margin can get assigned to give or take large delivery positions, causing significant risk to the trader and the brokerage firm.
> **[Physical delivery of stock F&O & their risks ](https://zerodha.com/z-connect/general/physical-delivery-of-stock-fo-their-risks)**
>
> Update: NSE has reintroduced Do Not Exercise Facility (DNE) in stock options from April 28, 2022. Physical delivery of stock options can potentially lead
[https://twitter.com/Nithin0dha/status/1477909745381957633?t=5ter0G2kqONlFfGVZIi-RA&s=19](https://twitter.com/Nithin0dha/status/1477909745381957633?t=5ter0G2kqONlFfGVZIi-RA&s=19)
Thankfully, NSE has [reintroduced DNE from April 28th.](https://archives.nseindia.com/content/circulars/CMPT51971.pdf)
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### Author:  [@meetarpit](https://tradingqna.com/u/meetarpit)
#### Post date: [April 11, 2022, 2:50pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/2 "2022-04-11T14:50:05Z")
So now margins will not be continuously increased to total contract value on final 4 days?
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### Author:  [@AKILAN](https://tradingqna.com/u/AKILAN)
#### Post date: [April 11, 2022, 3:12pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/3 "2022-04-11T15:12:22Z")
Is this for all stocks or only particular list of stocks ?
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### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [April 11, 2022, 3:23pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/4 "2022-04-11T15:23:28Z")
> [@meetarpit](#):
>
> So now margins will not be continuously increased to total contract value on final 4 days?
No changes in this. Margins for Long ITM Options will increase in phased manner from expiry minus 4 days, just like they do now.
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### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [April 11, 2022, 3:24pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/5 "2022-04-11T15:24:55Z")
> [@AKILAN](#):
>
> Is this for all stocks or only particular list of stocks
This is for Option contracts for stocks that trade in the F&O segment.
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### Author:  [@Rohan\_K](https://tradingqna.com/u/Rohan_K)
#### Post date: [April 11, 2022, 4:19pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/6 "2022-04-11T16:19:53Z")
I don’t understand what this change mean? If the margins are still going to be increased in phased manner.
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### Author:  [@Stonecold](https://tradingqna.com/u/Stonecold)
#### Post date: [April 11, 2022, 5:44pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/7 "2022-04-11T17:44:27Z")
Does this DNE rule applies only to ‘Close to the Money’ contracts or ITM and ‘Deep ITM’ contracts as well ?
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### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [April 12, 2022, 5:06am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/8 "2022-04-12T05:06:49Z")
> [@Stonecold](#):
>
> Does this DNE rule applies only to ‘Close to the Money’ contracts or ITM and ‘Deep ITM’ contracts as well ?
DNE facility is available only for the CTM (Close to the Money) contracts:
> For Call Options: 3 ITM options strikes immediately below the final settlement price are considered as ‘CTM’.
> For Put Options: 3 ITM options strikes immediately above the final settlement price are considered as ‘CTM’.
Option strikes beyond these will be physically settled. Also, only stockbrokers can use this option of DNE. If an investor has insufficient holdings or funds for settlement, the stockbroker could use the DNE facility to avoid default. This is especially useful if an option becomes due for settlement in the last few minutes of market close on expiry.
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### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [April 12, 2022, 6:13am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/9 "2022-04-12T06:13:51Z")
> [@Rohan\_K](#):
>
> I don’t understand what this change mean? If the margins are still going to be increased in phased manner.
This rule is useful if an option becomes due for settlement in the last few minutes of market close on expiry. As explained above:
> The risk though comes from out of the money options that suddenly turn in the money on the last day of expiry. No additional margins are blocked for OTM options in the expiry week, and when it suddenly turns in the money, a customer with small amounts of premium and no margin can get assigned to give or take large delivery positions, causing significant risk to the trader and the brokerage firm.
You can check out this post for more details:
> **[Physical delivery of stock F&O & their risks ](https://zerodha.com/z-connect/general/physical-delivery-of-stock-fo-their-risks)**
>
> Update: NSE has reintroduced Do Not Exercise Facility (DNE) in stock options from April 28, 2022. Physical delivery of stock options can potentially lead
---
### Author:  [@Truth\_Seeker](https://tradingqna.com/u/Truth_Seeker)
#### Post date: [April 13, 2022, 5:48pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/10 "2022-04-13T17:48:18Z")
Experts say SEBI’s flip-flop on Do Not Exercise facility is a classic case of bureaucratic overreach where a handful of powerful people altered the fate of thousands.
> **[SEBI experiment backfires; regulator takes U-turn on DNE in Options](https://www.fortuneindia.com/investing/sebi-experiment-backfires-regulator-takes-u-turn-on-dne-in-options/107771)**
>
> Experts say SEBI's flip-flop on Do Not Exercise facility is a classic case of bureaucratic overreach.
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### Author:  [@Alpha\_AA](https://tradingqna.com/u/Alpha_AA)
#### Post date: [April 13, 2022, 9:47pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/11 "2022-04-13T21:47:28Z")
Zerodha please advise,
This DNE means that now any CTM strike (3strikes ITM from ATM for both CE and PE)- will not be physically settled but will be cash settled , like index
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### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [April 14, 2022, 2:40am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/12 "2022-04-14T02:40:25Z")
Explained above: [NSE has reintroduced DNE (Do Not Exercise) form April 28th 2022 - #8 by ShubhS9](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/8)
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### Author:  [@NIlesh\_Gaikwad](https://tradingqna.com/u/NIlesh_Gaikwad)
#### Post date: [April 19, 2022, 12:53pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/14 "2022-04-19T12:53:10Z")
When DNE option is used, how does it affect the option seller?
For Example -
I own 1 lot of IOC,
sold a covered call i.e. 125 CE for INR 3 (i.e. 6500 x 3 = 19,500),
Current stock price 130 (MTM loss in sold 125 CE = 18k)
Currently the option is ITM but if it becomes CTM (125\<=CTM\<=128) and if the buyer doesn’t have enough money to take delivery, do I get to keep both the premium and the stock?
Or I get to keep the stock and have to bear the loss on sold 125 CE?
Appreciate your clarification, thanks.
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### Author:  [@NIlesh\_Gaikwad](https://tradingqna.com/u/NIlesh_Gaikwad)
#### Post date: [April 21, 2022, 5:08am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/15 "2022-04-21T05:08:33Z")
@ShubhS9 @Bhuvan @nithin @velu
Can u please?
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### Author:  [@nithin](https://tradingqna.com/u/nithin)
#### Post date: [April 21, 2022, 5:21am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/16 "2022-04-21T05:21:20Z")
> [@NIlesh\_Gaikwad](#):
>
> For Example -
> I own 1 lot of IOC,
> sold a covered call i.e. 125 CE for INR 3 (i.e. 6500 x 3 = 19,500),
> Current stock price 130 (MTM loss in sold 125 CE = 18k)
>
> Currently the option is ITM but if it becomes CTM (125\<=CTM\<=128) and if the buyer doesn’t have enough money to take delivery, do I get to keep both the premium and the stock?
> Or I get to keep the stock and have to bear the loss on sold 125 CE?
>
> Appreciate your clarification, thanks.
Yep, you get to keep the premium and the stock if the buyer doesn’t exercise for any reason.
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### Author:  [@NIlesh\_Gaikwad](https://tradingqna.com/u/NIlesh_Gaikwad)
#### Post date: [April 21, 2022, 1:05pm UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/17 "2022-04-21T13:05:42Z")
Noted, thanks @nithin.
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### Author:  [@Kesava\_Reddy](https://tradingqna.com/u/Kesava_Reddy)
#### Post date: [April 3, 2023, 3:46am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/18 "2023-04-03T03:46:03Z")
Hi Nithin,
Just read bse is moving to cash settlement for all options from April 29th expiry onwards.
Why nse is doing reverse…and removing DNE Is also bad…
many reatailers lose by paying hefty premium at the start and might gsin 1 in 10 at the last if options are cash settled.
I hope if bse cash settlement is true… the volumes should pick up there and nse has to switch back to previous mode.
They are changing meaning of OPTIONS itself…
Your thoughts on this
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### Author:  [@nithin](https://tradingqna.com/u/nithin)
#### Post date: [April 3, 2023, 8:13am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/19 "2023-04-03T08:13:03Z")
> [@Kesava\_Reddy](#):
>
> Just read bse is moving to cash settlement for all options from April 29th expiry onwards.
> Why nse is doing reverse…and removing DNE Is also bad…
The DNE option has been removed because of SEBI and not due to exchanges. So BSE isn’t going to cash settlement. Only the index derivatives on BSE are cash-settled, but so are on NSE.
The issue with DNE is that everyone with a strategy involving give-or-take delivery can get screwed if suddenly some positions don’t lead to give-or-take delivery because option buyers opted for DNE. Unlikely that the DNE option will be reintroduced.
Given that now the settlement of stocks and stock derivatives will happen at the same time, we are requesting SEBI/Exchanges to consider allowing regular trading activity in the post-market session between 3.40 pm to 4.00 pm, but only in the equity segment. Any option holder could buy stocks in that session to ensure that there is stock to deliver the next day when there is physical delivery of options. While we have a post-market session, it isn’t active, as all trading can happen only at the closing price. So usually, there isn’t enough liquidity if someone has to buy stocks, or there will be only buyers and no sellers.
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### Author:  [@Kesava\_Reddy](https://tradingqna.com/u/Kesava_Reddy)
#### Post date: [April 4, 2023, 3:34am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/20 "2023-04-04T03:34:01Z")
Thanks Nithin… but its a loss for retailers and risk for brokerages…with removal of Dne…
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### Author:  [@CrownedEagle](https://tradingqna.com/u/CrownedEagle)
#### Post date: [April 4, 2023, 9:08am UTC](https://tradingqna.com/t/nse-has-reintroduced-dne-do-not-exercise-form-april-28th-2022/129638/21 "2023-04-04T09:08:31Z")
Instead of DNE Why they don’t opt for Cash Settlement for CTM Options and Delivery for ITM ones?
What am I missing here?
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