This is JERIN from Bangalore. Sir I had a small doubt plz help me out with it. Sir if I have take a call spread strategy in stock option assume Tata motors and now the strike has gone around deep ITM since I have sold 1 lot of call and also bought 1lot of call, on the expiry date if I did not exercise my option will I end up in physical settlement or since I bought and sold a call will the options be closed automatically without any physical settlement . And what will be the STT charges charged.
If both Short Call and Long Call positions expire ITM, you will not have to take physical delivery and the obligation will be netted-off.
If one position expires ITM and the other OTM then the position that expires ITM will be physically settled while the OTM position will expire worthless.
For positions that are netted-off STT will be charged on the long position(s) as this is treated as notional delivery. STT will be charged at 0.125% on the intrinsic value of the position.
While STT charges for physical settlement are 0.1% of the contract value. You can learn more about physical settlement here.