I am new to trading world, and so far trying my hands at index trading only. I am always told that if you are into stocks FnO then better to square off positions on last week expiry Monday to avoid any physical delivery troubles. I want some clarifications around physical delivery of shares/equity. All questions are with respect to Zerodha.
How does physical delivery work? I mean, what if I bought OTM CE/PE and it expires OTM. I did not square off CE/PE position, then will it attract any penalty? or will physical delivery come into play here?
If the purchased CE option contract expires ITM, then how does physical delivery work? Do I need to keep sufficient funds in my trading account and Zerodha will automatically credit shares into my account after deducting the required funds? Are there any additional charges/penalty for not squaring off position?
Similarly, for long PE position, if it expires ITM, then do I need to keep shares available in my account and Zerodha will deduct shares from my account assuming I did not square off the position?
Any other important point I need to consider with respect to physical delivery?
Thanks in advance