What happen if we don't set of our position in options on expiry

F&O
1

What happen if we don’t set off our position in Option on expiry ?
Out of Money option

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If your options expire out of the money, it is worthless. You don’t have to sell (if you are long) or buy back (if you are short).

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if its index option you dont have to do anything on expiry, you can let them expire for what ever profit/loss they are at.

But if its stock option which is In the money, you will have to maintain required margin to take delivery or required number of stocks to give delivery at the time of expiry. so avoid ITM stock option on expiry week if u dont keep req margin/stock. for out of the money stock option there is no reqirements.

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@Joe_Maxpayne

Could you explain how this physical settlement works?
If am having a ITM call option on the day of expiry,
a seperate Market CNC order generates automatically or?

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i never took a physical delivery so i dont know exactly how it works. my guess lets say u have 3k of ITM sbi option, at the end of day your broker will place 3k of sbi delivery order on your account.

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@Joe_Maxpayne Sir, if I let my OTM long and short options expire worthless specially in Cash Settled Derivatives like NIFTY, BANK NIFTY and USDINR and don’t square them off will I have to pay the brokerages and taxes for square off.

Also in case of short options expiring and going to Zero without Square Off trade executed will there be any Brokerage or other charges?

It would be great if you could elaborate exact charges incurred for non squaring of Long and Short OTM/ATM options contracts after Expiry ends.

Also if any other person is knowledgeable about this mechanism do comment.

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If your Option position expires OTM and haven’t squared it off. It’ll expire worthless, there will be no charges applicable on it.

Long Option position, you’ll lose the entire premium paid. While, for Short Option position, you’ll get to keep the entire premium received.

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Thanks @ShubhS9 for sharing valuable information. Gives clarity regarding Options Trading.

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What happens to stock options if it expires ATM on expiry day?

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The intrinsic value here is 0 so tha contract will expire worthless, entire premium will be the profit/loss, and there won’t be any physical settlement.