Physical Settlement of Long OTM Stock Options during Last week of Expiry

F&O
1

Hello, I am Long some OTM call options (September Expiry) for a Stock. Expecting my OTM CEs to become ITM during this last week of September Expiry (24th Sept, last day of Expiry).

I have paid the option premium at the time of going long the call option. But my fear is, since its the last week of Expiry, will there be any additional margin or costs charged to me by Zerodha for holding my OTM call options if they become ITM on Monday, Tuesday, Wednesday or Thursday? I am not in a position where I can take physical settlement of the stocks if my options go ITM

I plan on holding my OTM call options for the Stock till Tuesday mostly. I am aware that no new buying is allowed in stock options on Wednesday & Thursday of the Expiry week.

PLEASE HELP! Thanks, I’m relatively new to options and confused about additional margin or any short margin penalty for going long on OTM stock options during last week of expiry

2

Long/Buy option (Calls & Puts) positions

  • The Exchange charges physical delivery margins as a percentage of applicable margins(VaR + ELM +Adhoc) of the underlying stock which is levied from expiry minus 4 days for long ITM options

Can check this for more info.

So if your Long OTM Option becomes ITM, you will require additional margins to hold the Option as this is Exchange requirement.

In such case it is better if you close your position.