I held a put option which was OTM but suddenly became ITM on expiry. I had spoken to my broker on call and asked them to net off the position because i didn’t want physical settlement. The square off of Put was not possible due to lack of liquidity, even though the price was 0.05. So the broker said they can buy futures to cancel out the delivery obligations.
I told them that please do the needful , do whatever you feel is the best option to reduce risk and reduce transaction costs. Then they called me back and said they will observe the movement till 3:20 pm and then decide if futures need to be bought. Because there was a chance the put may become OTM again.
So i saw in my order history. The broker had placed future buy orders at 3:17 pm but it had got rejected by the system.
Now , in contract note, i can see a short delivery (2 lots ).
What could i have done, where was i at fault and what can be the future course of action.
I believe NSE earlier provided a DNE ( do not exercise ) option for purchased options which was withdrawn. Now , i’m not sure about the rules, but i did explicitly ask my broker to not exercise the option. Now i just read some blog posts about similar incidences in the past and i believe it is unfair manipulation / deliberate loopholes to exploit the unknowing.