Physical stock delivery FnO adjustments for ITM call options

Guys, consider this that I am short on FEB Adanient 1740 CE and its expiry Day and 99% it’s going to be in the money (ITM).

For some or the other reasons I’m not able to square off the position on expiry day (liquidity issue, high bid/ask spread, etc etc) and i don’t have the physical share in my demat to give the delivery.

In this case, can i buy or go long on Adanient same expiry futures and will this transaction nullify the physical delivery obligation since I’m both short on call and long on futures?

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Hi @Nidal

Yes. If you are short ITM calls (giving delivery) and also have long futures (taking delivery) on expiry, It will lead to no delivery obligations as both positions are netted off.

While the net delivery obligation because of the various opposing F&O positions in the same stock could be zero, the delivery margins are still charged on each F&O position separately. So if you had an equal quantity of short futures and long puts, the delivery margin would be asked separately for both the futures and puts contracts. The delivery margin exists because you can exit one of the positions that can, in turn, lead to a delivery obligation.

You can read in detail about this here : What is Zerodha's policy on the physical settlement of equity derivatives on expiry?


Thanks for the detailed answer, @Meher_Smaran

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Can you tell me the solution for this, I am not able exit PFC PE sell @ShubhS9 @Nidal

Please also remember, you cannot start a new position (buy futures) on expiry day.

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Can I hedge this position on Monday buying 135 PE DEC expiry?

yes u can.