What happens to OTM positions marked for physical delivery?

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• Will physical delivery positions be squared off automatically?

  No, contracts marked for physical delivery will not be squared off automatically.

• Is there any change in the margin requirement for physical delivery?

  Yes, the system will now charge the appropriate physical delivery margin requirement for all contracts marked for physical delivery, including OTM contracts.

• What are the new major changes in the physical delivery process?

  Previously, only in-the-money (ITM) contracts were eligible for physical delivery marking. Now, we allow contracts up to 5% out-of-the-money (OTM) to be marked for physical delivery.

• What are the risks associated with the physical delivery of stock Futures & Options (F&O)?

  In the Indian capital markets, the physical delivery of stock derivatives, particularly stock futures and in-the-money stock options at expiry, introduces significant systemic risks. Here's a simplified breakdown of the implications: 1. Stock Futures ...

• What is physical delivery?

  Physical delivery is a term in an options or futures contract that requires the actual underlying asset to be delivered upon the specified delivery date rather than being settled with offsetting contracts. Here’s a more detailed explanation: 1. ...