Stock F&O Settlement And Margin Clarification

Hi @JayK ,

Can you please help me understand, as per the latest regulations, how will be the expiry settlement in the following trades?

Also, what will be the margin requirement?

Example 1
Long Futures + Long Put

Example 2
Short Futures + Long Call

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expiry settlement for index derivatives is settled in cash and for stocks you will have to buy or sell that particular stock

to check margin requirement you can add the particular future and option contract in a basket, final margin requirement can be seen there.

for eg nifty future long + put long

I don’t think there will be any delivery settlement in the above example if options expires ITM.

Also, the basket shows only margin requirement at the moment, but during expiry week it can be quite high specially being stocks F&O segment.

yes delivery settlement is applicable if options expires ITM and for OTM no there is no delivery settlement.

i don’t trade stocks fno, so I can’t comment on that. but for index i can say the margin requirement doesn’t change that much, only in rare high volatile cases exchange might increase, although its always advisable to maintain some cash over the final margin amount

Thanks @Akhil153045 @amit !

Hi @JayK @iamshrimohan ,

Can you please help me here?

Hi @pushpa,

As per a SEBI mandate, physical settlement is compulsory if a trader holds a position in any of the stock F&O contracts on an expiry date.

Since both positions will be netted off as in (security receivable for long futures with security deliverable for long put) and vice versa for another, there will be no physical settlement applicable in the example given above. However, delivery will be applicable in case of option expires Out the Money.

Read more about the margin requirement on our RMS policy (06 Physical settlement of F&O and Commodity) here : Risk Management Policy | Dhan

For any query related to specific account, do reach out to us via customer support channel.

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Are you sure @Sameet ?

In the Example 1, if PUTS expires OTM, will it nullify the delivery for Long Future as well?

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Hi @amit,

Yes, that’s the reason have mentioned “if option expires OTM then delivery will be applicable on Future”.