I just noticed- NIFTY quarterly expiry option contracts are available for September and December expiries in the current lot sizes of 75. How does this tie in with the lot sizes reducing to 50 with effect from July?
For example, let’s say someone is holding a single lot of 75 of NIFTY option for these expiries. When the lot size changes to 50 in July, what happens to the additional 25 units?
After the June expiry, the Nifty long-term options contracts (where the expiry is greater than 3 months) will be revised from the current lot size of 75 to 50. The average closing price of Nifty (cash) will be taken to adjust the contract value. Learn more.
Alternatively, the exchange may do an M2M settlement for the 25 units being reduced from the lot size. The additional 25 units will be settled in the June month expiry in the M2M settlement normally and will not roll over to the next day.
For example, you hold 1 lot Nifty Sep long CE option at 11900 strike. Nifty closes at 12000 on the last Thursday of June. You get 25 x 100 = Rs. 2500 M2M settlement EOD. Next day your lot size becomes 50 and settlement happens normally on contract expiry.
The exchange may either do this ^ or change the strike price to price in the lot size change (in case of OTM options).
We’ll update this post once we get the confirmation from the exchange.
How this can be done. I don’t think this is possible as changing strike price will change risk profile. Strike price change can happen only in cases like, bonus issue, right issue, extraordinary dividend (5 percent or more)
Hello Friends,
What happens if I have 2 lots ?
Would it become 3 lots/2 lots and cash settle 50 qty?
Thanks…