With reference to SEBI /NSE Circular, physical settlement is compulsory if a trader hold a position in any of the stock F&O contracts on an expiry date.
If Client holds a position in any Stock F&O contract, at expiry, client will be required to give/take delivery of stocks.
We have now modified our RMS policy with regards to physically settled derivative contracts as follows
The Exchange charge physical delivery margins on all the existing long In The Money stock option position in in the following manner:
10% of delivery margins computed on expiry -4 days EOD (Friday)
25% of delivery margins computed on expiry -3 days EOD (Monday)
45% of delivery margins computed on expiry -2 days EOD (Tuesday)*
70% of delivery margins computed on expiry -1 day EOD (Wednesday)*
If the client does not have sufficient funds for the additional margin requirement then penalty will charge.
No fresh positions will be allowed in Option Buy on Wednesday and Thursday of the expiry week.
On expiry day (Last Thursday) after 1 PM, no fresh position will be allowed in current month expiry contract.
If client wish to go for physical settlement, client would be required to fulfill the entire funds (Full contract value) / holdings requirement by Wednesday EOD.
If the positions are not squared off for any reason (e.g.: non-liquidity), then the contract would have to be settled physically and the client would be liable to pay the entire amount of the settlement. It is advisable for a client to square-off such positions on their own or add funds to carry the position to expiry.
You are requested to take note of the above changes and Square off or roll over the current month expiry Futures & Option contracts accordingly.
By: via @AlliesFin Serve Stock Market
