Why is higher than usual margin blocked for my F&O trades close to expiry?

Why is higher than usual margin blocked for my F&O trades close to expiry?

Higher than usual margin is blocked for Futures and Options (F&O) trades close to expiry due to the nature of physical delivery associated with these contracts. As F&O contracts approach their expiry date, the margins required for these contracts increase to align with the contract value. This is because physical settlement involves the actual delivery of the underlying stock, necessitating higher margins to cover potential obligations. 

Specifically, margins for F&O trades increase:

  • Four days before expiry (from the previous week's Friday to the expiry day) for open in-the-money (ITM) long options positions.
  • On the expiry day, if any open futures or short option positions need to be physically settled.


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