What is Physical Settlement in Derivatives?

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On the day of expiry, for a futures contract and or for an ITM options contract, the delivery of the actual underlying share is transferred to the client's demat account on T+2 days for a buy-side transaction. The shares are debited from the demat account in case of a short position.

Topic: Physical Settlement in Equity Derivatives (Futures & Options) Article

1 Comments

1. shyam sundar

| Link|January 5, 2022 9:13:23 PMReply

Hi. I have a doubt. If I am shorting one stock option and on expiry if there are no buyers , what is my liability ??
STOCK : ABC
CMP : 5000
SOLD 6500 CE for a premium of Rs 150 one single lot (200). When i wanted to square off , there are no buyers and on expiry the stock price is 5100. I could not square off. What will be liability in terms of margin, taxes and financial loss ? Will I end up in huge loss? please clarify

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