How to place request for physical delivery of Futures and Option position?
Requesting physical delivery of Futures and Option
positions involves following a structured process within the trading
application. Here's a step-by-step guide:
- Navigate to your trading platform.
- Select "Books" from the menu.
- Choose "Position" from the available options.
- Click on "Open Position" to access your current positions.
- Select the option "Mark to Physical Delivery."
It's important to note that this option is only available
on the expiry day of the contract.
Physical settlement specifically applies to stock
derivatives, whereas index futures and options are settled in cash.
For Future Positions:
- Long futures result in buy positions, where the security is
receivable.
- Short futures result in sell positions, where the security is
deliverable.
For Option Positions:
- Stock Options (Physical
Settlement): If you hold a stock option and
choose to exercise it, you will either receive shares of the underlying
stock (if you're the buyer of the call option or the put option) or
deliver shares (if you're the seller of the call option or the put
option).
- Index Options (Cash Settlement): When you exercise an index option, you don't
exchange the actual securities that make up the index. Instead, the
settlement amount is paid in cash based on the difference between the
index value at the time of exercise and the strike price of the option.
In-the-Money Call Option:
- Long Call results in a buy position with the security
receivable.
- Short Call results in a sell position with the security
deliverable.
In-the-Money Put Option:
- Long Put results in a sell position with the security deliverable.
- Short Put results in a buy position with the security receivable.
Quantity for
receipt/delivery = Market lot * Number of Contracts
Margin Collection:
|
Day (BOD)
|
Example days
|
Margin Applicable
|
|
E-4
|
Friday
|
10 % of Peak Margin
|
|
E-3
|
Monday
|
25 % of Peak Margin
|
|
E-2
|
Tuesday
|
45 % of Peak Margin
|
|
E-1
|
Wednesday
|
70 % of Peak Margin
|
|
E
|
Thursday
|
100 % of Peak Margin
|
*E stands for expiration
day
Note:
- On the expiry date, clients with open futures positions
have the option to request stock delivery by paying the contract value, with
stocks provided on T+1, but physical settlement is not permitted before expiry.
- On expiration day, maintaining peak margin (VAR + ELM + Ad hoc) is necessary
for physical settlement, while for in-the-money option buy positions, margin
collection is conducted by the exchange in phases.