Starting Sep 1st, finally no more STT trap on exercised options :)

@ShubhS9 - But if we do not manually close the positions on expiry day before 3:25 pm, will Zerodha not end up charging Call & Trade charge of Rs. 50/order for square off done by the RMS team?

Positions will be auto squared-off only if you take them in MIS. Not if you’re taking them in NRML.

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@ShubhS9 Can an option buyer have unlimited risk?
Suppose an option buyer buy 35000 CE for Jan, monthly expiry for 10 lot
which was trading at 1000, and now that 35000 CE becomes ITM, and has value of 3200 for 10 lot

and he decides hold until 30th of Jan

No options buyers have limited risk. Only to the extent of the premium paid, especially in the case of index options as they are cash settled.

With stock options, there is now a physical delivery risk as mentioned here.

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two things very confusing,

  1. Physicals delivery, shall we sell the same put options for next expiry with the margin required or something or buy stocks and hold worth same amount
  2. If I buy 35000 CE at 1000 for month of march 10 lots , it becomes 5000, deep ITM CE, of bank nifty, I am still holding till the end of march , it will be profit or loss??

For physical delivery you will have to keep funds equal to Strike Price * Lot Size * No. of Lots in your account to take delivery of shares in case you’re holding Long ITM Call Option or a Short ITM Put Option.

If you are holding Short ITM Call or Long ITM Put then you will have to maintain shares equal to Lot size * No. of Lots in your account.

You can also net-off your physical settlement obligation by holding an offsetting position in the same expiry. Here’s how the net-off scenarios work:


You can learn more on physical settlement here.

Your 35000 CE position will be in profit as long as Bank Nifty expires above 36000, this is your breakeven point (Strike Price + Premium paid), below that your position will be in loss.

Take for instance, Bank Nifty closes at 40000 on expiry day in March. As your position is ITM, this will be settled at intrinsic value (Spot Price - Strike Price), for the above example, IV of your position will be 5000, net you will be in profit of Rs. 4000 per lot (5000 - 1000 premium paid).

Would suggest you check out the Options module on Varsity for a better understanding of how options work;

I buy nifty put option today forget to square off it’s a normal order what will happen today nifty 17890 finished I am carrying 17950 pe

Ideally you should get paid 60*50 /- Zerodha will automatically close this trade. But not sure about the charges.

The 17950 PE will expire ITM and will be settled by the exchange at the intrinsic value ie. Rs. 60 (17950 - 17890). The STT of 0.125% will be applicable on the intrinsic value, it will be Rs. 3.75 (60 * 0.125 / 100 * lot size 50). Also, since the option has expired ITM, brokerage too will be applicable on this.