Can someone please tell what happens if both the put expire ITM and i am unable to square off because of low liquidity. Will there any penalty on me in any way? Is my max loss will be limited to the max loss of my strategy or will it more?
If your both Put expire ITM, there will be no physical delivery as your obligation will be netted-off.
There is no penalty, through for netted-off positions there is brokerage charged at 0.1% on the settled value and there will be STT charged on the long position(s) as this is treated as notional delivery.
You can read more here.
Max loss for hedged positions is limited.
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Thank you so much 