Hai!
I am new to option trading. This is theoretical question. Say I have an sold 30000 PE(ITM as of 02 March). I hold it till expiry. Should I have to square off before 3 30pm 05th March, if the market has gone in my favour? i.e., The market has been bullish or even sideways. What will happen if I don’t square off? WIll there be any penalty? Or Need for physical settlement?
Index F&O(Nifty, Banknifty and NiftyIT) are cash settled and don’t undergo physical delivery.
If you leave the position open, it will just get cash settled and normal trading charges(Brokerage, STT, ETC, etc) apply which will be applicable even if you close the position before expiry.
For Stock F&O, if the position is ITM, physical delivery will be applicable, so you need to take or give delivery of the underlying stock(depending on the contract). You can read the physical delivery policy here.
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Thank You… Understood…