Tradejini's Policy on Physical Settlement of Equity Derivatives

For Buy Side:

Clients engaging in BUY side transactions must ensure that the full amount required for taking delivery is maintained in their account. The total contract value should be available in their account as credit balance to facilitate a smooth transaction.

For Sell Side:

Clients involved in SELL side transactions should have the total quantity of the contract available in their demat account to fulfill the delivery obligation.

Understanding Physical Delivery – Derivative Contracts

All Open Stock F&O contracts on Expiry Day are subject to compulsory physical settlement. The settlement obligations are computed based on the following criteria:

Futures:

1. Long futures result in a buy (security receivable) position.
2. Short futures result in a sell (security deliverable) position.

In-the-money Call Options:

1. Long call options exercised lead to a buy (security receivable) position.
2. Short call options assigned lead to a sell (security deliverable) position.

In-the-money Put Options:

1. Long put options exercised result in a sell (security deliverable) position.
2. Short put options assigned result in a buy (security receivable) position.

The quantity to be delivered/received is equivalent to the market lot multiplied by the number of contracts, leading to physical settlement.