- What will happen if I do not square off myOption contract on expiry day?
- What does Rollover mean andwhat are the charges involved?
- How do I rollover a F&O positionin ban period?
- What is open interest limit?
- What is short delivery andwhat are the consequences?
- What is market-wide circuit breakers?
- Why did my order get executedat different price points?
- I have required SPAN margin for thetrades. Why was my open positionsquared off?
- What are unsettled funds?
- What is a daily margin statement andhow to interpret it?
The options contract will be physically settled if it is in the money. For contracts where delivery based physical settlement does not take place, the implication is as follows.
If you have bought options:
- In the money – STT on exercised contracts will be charged at the rate of 0.125% of the intrinsic value (how much in-the-money the option is) and not on the total contract.
- Out of the money – OTM option contracts will expire worthlessly. You will lose the entire contract; you get to keep the premiums received.
If you have shorted option:
STT for options is only on the sell-side which means you would've paid STT when initiating the short. So, there will be no STT impact on expiry. Depending on the moneyness of the option contract, you get to keep the premiums received.
Rollover involves carrying forward of futures position from one series, which is nearing expiry date, to the next one. On expiry, traders can either let a position lapse or enter a similar contract expiring at a future date.
For example, if you hold one future contract of Nifty expiring in March, you will have to sell the Nifty March future and buy the Nifty April future which you can hold until last Thursday of April.
For charges, when you sell the March future you will have to pay brokerage & charges and when you buy back April futures you must again pay brokerage & charges. Charges are similar to a normal buy and sell transaction.
As per SEBI Circular and clarification from the exchanges, rollover of contracts in ban period is not allowed. If you have a position in a contract that is in ban, you will only be allowed to exit the existing position.
Open Interest is the number of contracts or positions outstanding (open) in futures and options in the market.
There is a client wise open interest limit of 5% of the total number of all derivates contracts for the same underlying and a 15% open interest limitation for the trading members (brokers)
Open interest in any derivative cannot exceed the market-wide position limit set by exchange without incurring a penalty.
Short delivery means the seller of the shares has defaulted on the settlement of shares. Short delivery is an event where the seller of the shares, defaults on the delivery of the shares by T+2 Days. In such cases, the exchange holds an auction for the same quantity of shares & delivers it to the buyer. (In this case, the settlement time will be T+3 days)
Short delivery can happen in stocks with less liquidity, or if a short MIS/BO/CO has not been squared off in some circumstances.
Circuit breakers are pre-defined values in percentage terms, which trigger an automatic check when there is a runaway move in any security or index on either direction. The values are calculated from the previous closing level of the security or the index.
When you place a market order, the order will get executed at the best bid/offer available at the exchange. If the quantity of the existing bids/offers is not enough to match your order quantity, in that case, the remaining unexecuted quantity will be matched against the next best bid/offer.
According to SEBI Circular and the NSE circular, it is mandatory for brokers to collect the complete SPAN + Exposure margin, as opposed to just SPAN Margin, to carry forward Futures and Options positions to the next day.
If you do not have the full margin required to carry forward the position, you will be charged margin penalty by the exchange and you position may be squared off by our RMS team.
Unsettled Funds in your account is the amount of money you are supposed to receive on account of profit made or stocks sold. The settlement for trades is not instant and exchanges follow a rolling settlement cycle.
You will not be able to utilize the proceeds to buy other shares. Funds from the sale of shares proceed get settled to your trading account after two trading days. Similarly, trades in the F&O segment get settled after one trading day.
Note: If T+1 day is a settlement day holiday, then intraday F&O profits will be available on the next trade settlement day.
As per the exchange regulations, we send a daily margin statement to every client's registered email address. This statement informs the client his/her margin status, i.e., what free margins are available in her/his account to take new positions without incurring penalty or charges. There is a definite format for the daily margin statement prescribed by SEBI.