Top Tweets for #physicalsettlement
Any in the money option contract not closed within expiry will lead to delivery obligation, provided one has sufficient margin to take #PhysicalSettlement.
Margin requirement on expiry day for 1 lot #Reliance till date will need ~7L margin.
If someone doesn’t have the margin broker will auto close the position.
If user close the ITM position there is not question of taking delivery.
Now if someone hasn’t closed the put write position, he has the obligation to take #Reliance by whatever price it comes in next two days.
Broker will manage all this thing & will charge hefty brokerage (close to 2000-3000 roughly) for doing #PhysicalSettlement.
For illiquid stock it will lead to Auction process, that is a different story.
Search & read, my old posts for last 1-2 years. These are all discussed.
Yes, if stock option become "In The Money" the buyer and seller both have obligation to take or give delivery.
This is called #PhysicalSettlement.
Yes you read it right even if you are an #OptionBuyer, then also.
Scenario 1: Suppose Someone bought ITC 460 call at 8 rs and ITC at month end expiry closed at 5 rs. Even the option buyer at loss, if he doesn't close the option, he has obligation to take delivery of ITC stocks based on his purchase. If he bough 2 lots (considering lot size), he have to take deliver of 1600*2 = 3200 ITC stocks as delivery. Total cost would be 3200 * 460 = 14.7 Lakh approx.
Scenario 2: Same true for selling also in case of, "In the money sold option position". For call selling the seller has to give delivery of that number of stocks based on lot size.
If he doesn't hold those number of stocks it will go for "Auction" and that could cost uptp 20% extra. Read here 👇
https://t.co/egubLWE3qQ
Yes, if stock option become "In The Money" the buyer and seller both have obligation to take or give delivery.
This is called #PhysicalSettlement.
Yes you read it right even if you are an #OptionBuyer, then also.
Scenario 1: Suppose Someone bought ITC 460 call at 8 rs and ITC at month end expiry closed at 5 rs. Even the option buyer at loss, if he doesn't close the option, he has obligation to take delivery of ITC stocks based on his purchase. If he bough 2 lots (considering lot size), he have to take deliver of 1600*2 = 3200 ITC stocks as delivery. Total cost would be 3200 * 460 = 14.7 Lakh approx.
Scenario 2: Same true for selling also in case of, "In the money sold option position". For call selling the seller has to give delivery of that number of stocks based on lot size.
If he doesn't hold those number of stocks it will go for "Auction" and that could cost uptp 20% extra. Read here 👇
https://t.co/egubLWE3qQ
A rough calculation for illustration purpose:
So in the given example of 2400 CE of Reliance, if it goes for "Physical Settlement" and further "Auction" process a potential loss could be -
20 x 2400 / 100 = 420 x 250 (lot size) = 1,05,000
As the settlement price could be as high as (2400 + 420) = 2820, which lead more than 1 Lakh loss.
Also the brokerage will be charged -
(.25% of contract value)
2820 x 250 x .0025 = 1762
A risk of 1.6 Lakh.
#PhysicalSettlement #Auction
Received #LT @3100 in #PhysicalSettlement 2 days back.
Larsen and Toubro up more than 200 rupees in 2 days, giving 60,000+ profit.
Thanks to the call seller who didn’t squared off to save 5 points or 1,500 rs in expiry…
Here is a beautiful example how the LT Call Seller got **** yesterday...
Read the thread from starting again, to understand the risk and consequence of "Physical Settlement".
Yesterday at closing my LT 3100 CE buy option didn't have a proper buyer. I tried to sell it around 18 rs but the bid was very low 4-5 rs only, while LT was trading near 3118.
This is what greedy opposite party do, don't pay the right Intrinsic Value and close option.
Today LT is up 100 rs, closed at 3190.
The call seller if don't have 300 shares in demat, will face "Short Deliver" notice and the broker will buy 300 LT share today possible at a rate of 3190 or more, which will be decided in Auction process.
A straight loss of 100 * 300 + additional brokerage, which is close to 35,000 rupees.
And luckily being a buyer I will make profit this time.
#PhysicalSettlement
Hi @zerodha,
As per your below blog, I found that #HDFC to #HDFCBank will attract #PhysicalSettlement charge, which is .25% of the transaction value.
https://t.co/xowPgXFwDo
Whereas #zerodha says it takes 0 brokerage for equity delivery & this is not a FNO to Equity physical settlement, rather a corporate action, I feel this charge is not right to be passed to clients.
Need your clarification on this. #HDFCMerger
@Nithin0dha
@Nithin0dha comments appreciated !!
How many you know or faced #PhysicalSettlement of stock #option on expiry.
If you don't close your position on expiry you are liable to take or give #Delivery. Do you know broker takes a hefty charge (additionally) on the total transaction value.
If you go to charges page of #zerodha you will find the disclaimer section. https://t.co/4mKSTJWmSw
For those who thought discount brokers save you a lot of money.
Picture from a recent SEBI Press conference
Just read👇
Big Shoutout for super #Optiontrader Vijay Jaju ji
I was thrilled to talk to him as he discussed his amazing unique #Arbitrage strategy, taking advantage of #Physicalsettlement in #derivatives with combination of #SLBM market.
Do hear him at #OptionSymposium
#OptionsTrading
Learn from #AlgoTrading Master Mr. Vijay Jaju (#AlgoTrader, 18+ years experience) at #OptionSymposium 5.0 as he redefines #Option #Arbitrage #Trading systems by simplifying #Strategy #Algo Execution
Know more: https://t.co/USPsynUoCn
@aliceblue_india @espressoinvest @mstock_in
@Nithin0dha For option buyer, it's not a RIGHT anymore rather an obligation with this stupid Physical delivery. #AgainstPhysicalDelivery #Trading #India #PhysicalSettlement #RightIsRight #RightIsNotObligation
#Physicalsettlement rule is against retail and favor institutional trader. also retail is not able to hedge due to this rule during expiry week. It is being misused by brokers @SEBI_India
#Niittech Short position that I was carrying is forcefully squared off even though I have sufficient fund in my account to take delivery. @zerodha @SEBI_India
#PhysicalSettlement reports from our team suggests brokers not allowing trades in these scrips in general to many clients (large clients are getting some exceptions on a case to case basis) creating a loss of many #trading opportunities.
What's your experience with your brokers?
India has the second highest ratio of derivatives to equity volumes in the world and all options contracts traded on the exchange, Bank Nifty, in particular, has had a phenomenal growth ...
#physicalsettlement #stockderivative #pros #cons
https://t.co/JDejUK8ywt
#Physicalsettlement had a impact on less liquid f&o stoxks.Reluctance among participants to carry forward trade..low OI in August Expiry. #Nifty and #banknifty strong Rolls #OptionsTrading https://t.co/aaj7IcBJj9
Rollover & Expiry Analysis for July 2018. Stellar rally in both Nifty and Bank Nifty with Nifty up by 5.59% while Bank Nifty was up by 4.36% E-o-E. Rollover too was on a strong note Nifty roll of 72.89% while Bank Nifty roll at 77.49%. #OptionsTrading
https://t.co/K4Sqz5bqEn
📢📢 PHYSICAL SETTLEMENT के बारे में जानने के लिए देखें LIVE STREAMING आज रात 9:30 बजे👇👇
https://t.co/kDJfIknwRX
@youtube @YouTubeIndia @nitinbhatia121 #YouTube #LiveStreaming #Stocks #StockMarket #Trading #NitinBhatia #Equity #QandA #PhysicalSettlement #derivatives
Get the insights on how physical settlement will impact your future and option positions #optionstrading #MarketUpdate #physicalsettlement https://t.co/PX9rrpHPyp
As per the #SEBI guidelines, #physicalsettlement of stock derivatives shall be made mandatory in a phased/calibrated manner.
Article by @Tinagadodia on Decoding the Mystery of Physical Settlement
https://t.co/azIoR01TIS
#OptionsTrading
As per the #SEBI guidelines, #physicalsettlement of stock derivatives shall be made mandatory in a phased/calibrated manner.
Article by @Tinagadodia on Decoding the Mystery of Physical Settlement
https://t.co/azIoR01TIS
#OptionsTrading
#SEBI #Derivatives
Decides to make #PhysicalSettlement mandatory
To be done in a phased manner
Strengthened existing entry criteria for introduction of stocks into the derivative segment
@CNBC_Awaaz
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