Query on DNE option in MCX/NCO

Commodities
1

Hi Zerodha team,

I have a query on the devolvement process in NCO.

Yesterday was crude oil expiry on NCO. During evening, I was short 7 lots of NCO CRUDEOIL 8000 PE and 3 lots of NCO CRUDEOIL 9000 PE. The CE’s in my straddle were already squared off close to 0.

Since the bid-ask spread was wide at 11 PM, I let them devolve into Future buy, but today I saw that there are only 5 lots of long FUT.

The expiry of crudeoil was at a value of 7432, which means all these 10 contracts were ITM.

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What happened to the remaing 5? I’m assuming the option buyer used the DNE facility? In that case will he get back cash according to cash settlement? Or will his option expire at 0? But in that case, the option seller should be keeping all the premium, which does not appear to be the case according to the contract notes.

I’m posting this here for general awareness, but if you need more details, I will be happy to open a ticket or reply via DM

thanks

2

You would have received the premium on the day you shorted the option. Buyer of the option already paid the premium which will be his loss now as it becomes zero because of DNE.

3

Hi @Ragavendran_M

Yes of course I received the premium when I sold the option.

My question is, if the buyer uses DNE, then do I get to keep all the premium I got? Because from the contract notes, it appears that all my options were bought at the settlement price (which was 7432). If my understanding is correct, then 5 options should have been bought at 7432, and the remaining 5 at 0.

4

Can you DM the id we will check and get back.

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