Query on options of Physically settled stocks?

Hi , If on Tuesday I am holding OTM option and on start of Wednesday it is still OTM and I convert it into MIS , and during the day it turn ITM ( but it is MIS now ) , in this scenario also there will be extra margin required ?

Yes, you will need extra margin even if you convert your position to MIS.

Thanks @ShubhS9 , and if during the day it turns ITM and I didn’t have enough margin and the position is squared off either by myself or RMS team , will there be any penalty in this case ?