I have already mentioned above, client has to make shares available in Demat account before expiry to avoid short delivery. If client makes unpledge request on expiry day he will have shares in his Demat account only on next day, by that time settlement process is already completed.
The new SEBI margin regulations are in effect now but I’m still facing the same issue initially flagged by @pnsudhesh.
Are there any updates on this at all?
If the underlying shares are pledged, and there is a chance that these shares are going to get called at expiration, can I unpledge them one day prior to expiry on Zerodha?
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Yes, you can unpledge your shares. If you place unpledge request before 2 PM on day before expiry, the shares will be unpledged and will be available for trading the next day. Explained here.
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Hi @ShubhS9, what if we purchase 1 lot of shares on ‘the expiry day’ itself from cash market (considering we have enough money), then will it still get short delivered or not ?
You need to have sufficient quantity to deliver in your Demat account on the day of expiry.
Buy before expiry @Stonecold else you will have to face cold reality that may get you stoned 
I would say - as a beginner it’s prudent to only do covered calls and secured puts. Tats what is suited for my average intellect. One can get into juggling and adjusting naked options later.
But ofcourse, most ppl consider themselves ‘above average’, and the market is often known to clear that misunderstanding.
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Ok, so you mean that on expiry itself we have to give delivery of the shares and not on T+1 or T+2…right ?
Right, shares should be in your demat on expiry day to give delivery.
Won’t it suffice if I had made a buy in cash equity on Wednesday. And the future expiry is on Thursday?
I agree but Siva said as per his knowledge that is how Indian regulators want …but it is as per his knowledge…I will check with other brokers.
So if we unpledge the shares 2 days before expiry - that means we have to add more cash because collateral margin we got from pledging will lost as well …so for those 2 days you need to have quite a lot of cash. Correct me if am wrong @ShubhS9
Right, you’ll need to have sufficient funds. Alternatively, you can also pledge other securities for margin and use it.
@ShubhS9 @siva I think we are talking about two different issues here. My initial question was not about delivery of the shares but about why a margin is required for a covered call (assuming I have the shares in demat).
Margin should be negligible as I’ve the cover in the form of shares in my demat. Zerodha had not answered that clearly. Of course I do see the point that shares should in demat before the settlement takes place but my problem was about initial margin.
Yes. Almost like Zerodha only believes in options and futures as hedge, but not in the underlying stock. Or they don’t want to code such dependencies, as its work.
Which broker accommodates margins for covered call? Probably an opportunity.
That is how systems are in India, you can pledge those shares and get collateral, use that collateral to write option. Also 50% cash is required to cover margin.
I am aware that there is no risk in this case but as said earlier that is how systems are developed in India.
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So to summarize, if you have 1 lot of underlying shares, You cannot write a covered call without paying margin. If your call gets assigned, you need to have the shares in the demat to deliver physically. If you do not have shares, you need to maintain the sufficient cash balance. Am I correct?
@Younus_Farveaz As a seller, for calls ITM, if you don’t have shares, square off before expiry. Else there will be penalty for short delivery.
Hi @Siva I now understand how this works. but should we not improve this? covered call is a hedged option writing and one need not go through pledge+cash margin, etc to sell the right for calling my shares at price x to someone.
Our roads were/are designed with flawed spec but it does not mean we have to build roads like today forever. Improvement needed in everything we do. Of course this is not a compliant.
I mean not just us, all brokers, exchanges do it that way, not like other brokers are allowing and we are not.
You think covered call system is sin
Take this credit vertical spread with max risk of 5k needs approx margin of 50k this is bonkers
SEBI n brokers should act fast to create system where be it covered call it must be locked once entered one cannot exit one leg exit both
Same goes for verticle spreads