Since the introduction of the NSE Circular dated December 31st, 2018, all Options stocks have been mandated for physical settlement.
Physical settlement means if you hold a position in any Stock Options contract, at expiry, you will be required to give/take delivery of stocks. The physical settlement is restricted only to stock derivatives. Physical settlement of index options is not applicable. Index contracts are cash-settled only.
To avoid the complexity of physical settlement, it is highly recommended for a trader to square off all positions before expiry.
To mitigate these potential costs, the SAMCO RMS Policy has been updated to include the following measures:
- All open positions in these stocks’ contracts by the end of the business day preceding the Expiry Day will be treated as MIS positions upon the market’s opening on the Expiry Day. These positions will automatically be set for square-off.
- Product types MIS, CO & BO shall continue to be available without Additional margin and shall be squared off after 2:00 PM.
- All such outstanding positions in these physical derivative contracts of Expiry shall be considered MIS positions and will be automatically squared off after 2:00 PM.
- No fresh positions in NRML shall be permitted in these scrips on the expiry day for the current month. Product types MIS/BO/CO shall continue to be available and shall be squared off after 2:00 PM.
- No position conversion or spread orders shall be allowed in these contracts on the expiry day.
- Fresh position on expiry only available in MIS product type till 1:00 PM
Margin Requirement Policy for Stock Options during Physical Settlement:-
| Day (Beginning of the day) | Margin Requirement |
| For E-4 Day | 10% of (VAR + ELM + Adhoc Margin of Underlying Asset *Qty*Strike Price) |
| For E-3 Day | 25% of (VAR + ELM + Adhoc Margin of Underlying Asset*Qty*Strike Price) |
| For E-2 Day | 45% of (VAR + ELM + Adhoc Margin of Underlying Asset*Qty*Strike Price) |
| For E-1 Day | 70% of (VAR + ELM + Adhoc Margin of Underlying Asset*Qty*Strike Price) |
| Expiry Day | 100% of (VAR + ELM + Adhoc Margin of Underlying Asset*Qty*Strike Price) |
- Click Here to calculate the margin requirement during physical settlement period.
For those with positions in these stocks, there are two options:
Option 1 – Rollover the positions using spread contracts either manually or by the end of trading on the day prior to the Expiry Day.
Option 2 – Manually square off positions on the Expiry Day before 2 PM, considering them as MIS positions. Traders who wish to carry positions to the next month can exit these MIS positions for the current month and enter new positions in the next month’s contracts, selecting either the MIS or NRML product category based on their preference.
In the event that neither Option 1 nor Option 2 is executed, SAMCO RMS will automatically square off open positions (which are outstanding as MIS) at 2 PM on the Expiry Day.
- Important Note: The policy may be changed at discretion of the RMS team.
Wishing you successful trading!
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very precios content for all traders. Thanks
Why this 46 stock only?
Dear Mr. Deepak, thank you for getting in touch with us. This list was set by the Exchange, based on the value-research made by its own internal teams.
We hope this clarifies things. Thank you for your time. Have a great day!
Kindly have a full option plateform
Dear Amulya, thank you for getting in touch with us. We do have multiple platforms available for trading options in the market. We’ve got the mobile app (SAMCO), web terminal (trade.samco.in) and the desktop EXE (Nest Trader). It’s entirely up to you to decide on the platform that’s more convenient for you.
Thank you for your time. Have a great day! 😀
Very very thanks for intimating clients in advance.
Is it also applicable for option positions?
Dear Jayesh, yes, this is applicable to the option positions (In-the-Money) as well. Those positions which are “Out-of-The-Money” are not included in this.
We hope this answers your question. In case you have any questions or need any help, please do contact us; we’re happy to help you. Thank you for your time. Have a great day!
Bottom line: Can the traders be saved from physical delivery by SAMCOs RMS intervention – yes or no? Try to speak plain simple English please no technical terms. By RMS whatever intervention, is physical delivery avoidable
Greetings! Thank you for getting in touch with us. Yes, by squaring-off your position in intraday trade, you won’t be receiving the delivery of shares; everything gets settled in cash this way.
We hope this answers your query. In case you have any questions or need any help, please do contact us; we’re happy to help you. Thank you for your time. Have a great day!
Thanks so very much for traders
Good work
Dear Amit, thank you so much. Do stick around for more Exchange updates, right here in our knowledge center. Happy Trading! 🙂
Needful information to all active traders..
Thank you sir for your response. On expiry in-the-money gets ‘exercised’ and the trader is in profit. In your above article to all traders you mention ‘squaring off’, do you mean exercised or something different.? Please clarify with a trade example. Also, this government circular is for all contracts – near month, middle month and far month? Thanks.
Sir I have a position in hexaware out the money option
Wat should I do??
I don’t want to take delivery
Till which date I can wait for my position??
In compliance with the new NSE regulations, SAMCO shall consider your carryforward position as an intraday position on the day of the expiry, and square-off your positions at 3.15pm, and thereby save you the hassle of physical settlement. If you wish to maintain any futures positions, you may roll over the said instruments.
We hope this resolves your queries. In case you have any questions or need any help, please do contact us; we’re happy to help you. Thank you for your time. Have a great day! 🙂
how can we see historical profit/loss
Dear Prakash, to check your profit & loss, kindly open your back-office webpage and scroll down to ‘Reports’ tab and press the ‘Profit &loss Equity’ or ‘Profit& loss Derivatives’ Tab. You can find the consolidated report there, categorized by year-on-year basis.
If you have any more queries or issues, feel free to contact us; we’re happy to help you. Thank you for your valuable time. Have a great day ahead!