Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Things to Know About Physical Settlement for 46 Scrips in NSE Derivatives Segment

49 sec read

SEBI in their circular has mandated compulsory delivery of F&O position open on expiry of these 46 stocks for July expiry .

So what does it mean?

Currently, traders leave their F&O position open on expiry for cash settlement. Wherein, either the profit is credited to their account OR the loss in debited from their account.

But

Going forward, if traders leave their F&O position open on expiry of these 46 stocks for July expiry then they will be physically settled (delivered).

So what the implications are of physically settled/delivered?

  • Pay-In of Funds: The trader needs to make the funds available to the extent of contract value if he/she is long on (futures/calls) or short on put.
  • Delivery of Stock: The trader needs to deliver the shares to the extent of contract value if he/she is Short on (futures/calls) or Long on put.

In consideration with this change, most of the stockbrokers are squaring off such open position 2 to 4 days prior to expiry.  If the broker is unable to square off the position before expiry, for whatsoever reason, the trader will be liable to make funds/securities available in your account to the extent of the settlement value/securities.

So what’s the solution to this?

Traders, in order to continue their position on the script, can Rollover their position from one contract to another.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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