Stock Covered Call - Expiry Day Settlement Queries
Hi Zerodha Support,
I have the following positions:
SHORT: SBIN 28 Apr 2026 1020 CE (NFO) | Qty: -750 | Avg Price: ₹29.8
LONG: STATE BANK OF INDIA (NSE) | Qty: +750 shares | Avg Price: ₹999.75
I have the following doubts regarding expiry day:
Contract Exercise
Will the 1020 CE contract be exercised automatically on expiry, or do I need to do it manually?
Physical Settlement
Since I already hold 750 SBIN shares in my demat (equal to option lot size), will my shares be automatically used for delivery? Do I need to pay anything extra?
Intrinsic Value Payment
If SBIN goes above 1025 on expiry day, as a call option seller, do I need to pay the intrinsic value to the buyer, if I already own 750 shares in my demat account?
Premium at 3:15 PM
If I want to manually close before expiry at 3:15 PM, approximately what will the premium be if SBIN is at ₹1025?
Profit Calculation
If I exit manually at 3:15 PM - what is my approximate profit?
If I let it auto exercise - what is my approximate profit?
STT Charges
What is the STT if I exit manually before 3:15 PM?
What is the STT if contract is auto exercised via physical settlement?
Will STT be higher in either case?
ITM Premium
If the stock goes ITM on expiry day, will the premium be higher than what I received (₹29.8)? Or will it only be the intrinsic value?
You just need to maintain the required margin on expiry day (50% of the contract value or 1.5× NRML margin, whichever is lower).There’s no need to manually exercise the contract.
As mentioned if margins are maintained on expiry day wont be an issue but In case of physical settlement, a brokerage of 0.25% on the total delivery value will be charged.
Under physical delivery, the option is settled at zero, and your shares are delivered at the strike price (1020).
As expiry approaches around 3:15 PM, the option price comes very close to its intrinsic value. In this case, the intrinsic value is ₹5, so the premium will be around ₹5.
Whether you exit around 3:15 PM or let it go to settlement, the outcome is largely the same if you exit, you’ll buy back the option at around ₹5, and if you let it settle, you’ll deliver shares at ₹1,020 when the market is ₹1,025, effectively giving up ₹5 in both cases while still keeping the premium received.Note that this assumes a closing price of ₹1,025, and the same price at 3:15 PM, considering only the intrinsic value for the calculation.
If you exit manually, STT is 0.15% on the option premium
If it goes to physical settlement STT is 0.1% of the contract value
On expiry day, if an option is ITM, its price stays very close to intrinsic value since there’s hardly any time value left.