What happens if I don't square off my positions in options?

What happens if I don’t square off my positions in options ?

Index Options (Nifty and Bank Nifty, Nifty Financial Services) are cash-settled.

  • If your Option expires OTM, it expires worthless.

  • ITM Options are settled at their Intrinsic Value.

And depending on your Profit/Loss money will be credited to / debited from your account.

Also, if your Long Option position expires ITM, exchange will levy STT at 0.125% on the intrinsic value. There will be no STT on the Short position as STT is already paid when you sell the option. More details here:

Stock Options are Physically Settled.

  • If your Option expires OTM it expires worthless.

  • If your Option expires ITM it will be physically settled and you will be obliged to Recieve or Deliver shares depending on your position, you can read more on physical settlement here.

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Can you please clarify this ,
For example
CASE 1 : I bought NIFTY 10900 CE . If didnot square off before expiry I have to take delivery of Nifty share . At what price will I get those share at ? Will get at 10900 or at Current Market PRICE
CASE 2 : Same scenario but I bought at 10900PE
CASE 3 : I sold 10900 pe
CASE 4 : I sold 10900 CE
CAN YOU PLEASE CLEAR MY QUERY REGARDING THIS . THANK YOU

Index Options (Nifty and Bank Nifty) are cash settled, there is no concept of physical delivery in Index Options.

Upon expiry of Options you hold, any profit/loss arising will be credited to / debited from your account.

What if the loss is greater than the amount available in my account.

@suri Your position will stay as is, but your account will result in negative balance of your loss (if your loss is 10k and you have only 9k funds , it will show -1k as funds available ), which you will have to add to your account or you will be charged interest of 0.05% on debit balance. This is not my answer credit goes to @ShubhS9 . I also asked similar question , this is the answer he gave me .

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What if you ignore it forever

In such a case, your account will result in a debit balance after that you will have to fund your account or there will be interest charged at 0.05%.

You cannot ignore it forever, the broker is liable to take action against you in such cases.

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Hey. Thanks for the explanation. Could you tell me how long will it take for profit based on intrinsic value to get credited to the demat account ?

The time taken for settlement in F&O segment is T+1 day.

Is there any brokerage (20 rupees) if I didn’t closed the position and let it expire?

If your option position expires OTM, there will be no brokerage charged. If your position expires ITM, brokerage will be applicable.

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Could you please also confirm what will happen to the invested amount (margin) of bank nifty after expiry. In ITM case.

Hi, I have bought a PUT option of OTM for NIFTY at a premium of 77 (7775) and on the expiry date I squared off the order around 3:15pm for 6.60 (6.6075).

So my question is, will my loss contains (77-6.60)*75 or the margin amount which is 115000 approx required for square off…!!!

Kindly help me here? I squared it off and was little concerned whether I lost the 1.15L.

Thanks in advance…!!

The difference between your buy price (Rs. 77) and your sell price (Rs. 6.6) will be your P&L. Here, your loss will be Rs. 70.4 * Lot Size.

To learn more about Options, would suggest you read Varsity:

does zerodha automatically squares of my put/call writing position at expiry? this is because when i was doing virtual trading on sensibull, the P&L is calculated based upon the LTP of the put option even though when i had left the option to expire.
Kindly explain

No, as explained above :point_down:

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Sir maine aaj 2 July ko 15800ce Nifty50 45rski rate mai 8july2021 expirypurchase kiya and sell karni ki bid 60rs par lagayi thi jo ki cancell ho gyi. Ab kya hoga kindly explain. Premium ke sath mere zerodha mai amount se 250rs be debit ho gye.
Kya mujhe delivery miligi ya mere sare amount 0 ho gye ya mujhe aur bhi kuch pay karna padega. Closing ke time 15722tha Nifty. Kindly explain
Nifty purchase kiya tha wo holding mai show hoga ya position mai. Zerodha app par show kaha par hoga. Kya sell par mere debit amount wapas credit ho jaega kya. I am afraid

You can see your F&O positions in the “Positions” section on both Kite Web and app.

Yes, upon squaring-off your position, amount equal to the price at which you sell at multiplied by lot size will be credited to your account.

What happens if my stock option bought expires in the money. and if I’m not having funds to take delivery of shares.