What happens if MIS Option Auto-square off fails

Hi Everyone,

It would be really helpful if someone could please clarify the below doubt. This is regarding only about the Index Options (Nifty and BankNifty).

Suppose I have sold an Option Contract on Intraday basis (Using leverage say 7X) on expiry day and have not squared it off.
And, the option is OTM and there are no sellers available for me to buy back the option even during the auto square off period.

Then, how will the contract be settled?
Should I have the complete 7X amount available in my account as it was not closed in the intraday period. Or will it be cash settled anyway, even if i dont have 7X amount?

Is it a situation that can happen or anyone has faced this situation before?

The contract will expire worthless and margin blocked for the contract will be released at the end of the day.

It will be cash settled regardless of what your account balance is.

1 Like

Thank you very much for the clarification @MohammedFaisal.