loader2
Login Open ICICI 3-in-1 Account
Open ICICI 3-in-1 Account

How can we help you ?

Choose the category to find the help you need

    Announcements

    Read More
    All you need to know about Buy Now Pay Later (MTF) while investing in Stocks...
    Read More
    Fno Back

    Physical Delivery In F&O

    Margin Requirement for Physical Settlement

    Margin requirement for physical settlement in Futures

    In a situation that one chooses physical settlement in Futures, cash equivalent to contract value (Open quantity* Futures price) needs to be brought in to take delivery of shares when it is buying futures. While selling futures, one needs to ensure that sufficient free shares are available in their demat account before 11:00 am on the expiry day.

    Example for futures: -

    Future:

    If you have a long position in 1 lot (150 Qty) TCS futures at Rs.4000 so contract value becomes Rs.6 lakhs (Qty*Price). Thus, an initial margin of Rs.1,20,000 or assuming 20% SPAN + ELM of contract value is required to create an open position. When going for physical settlement, then remaining cash equivalent needs to be brought in addition to the initial margin deposited amount to take delivery of 150 shares amounting to Rs 6 Lakhs. 

    When selling a Futures contract in TCS 1 lot (150 Qty) at Rs.4000, contract value becomes Rs. 6 lakhs. You have to pay an initial margin of 1,20,000 or assuming 20% SPAN +ELM of contract value to create an open position. Whilst going for physical settlement, then one needs to ensure free balance of 150 shares is available in their demat account of TCS to give delivery of 150 shares.

    Margin Requirement for physical settlement in Stocks Options

    Margin requirements in Stock Options work in a different manner from Futures contracts. This is because as the contracts move closer to expiry day, the margin requirements increase and they cannot be rolled over as in the case of Futures contracts.

    For instances, On expiry day for Options contracts, there is a gradual increase in margin requirement. So, on E-4 day (i.e., 4 days before Expiry) one needs 10 % margins of the contract value (Qty*Price) also known as VaR + ELM +Adhoc margins. On E-3 day, one needs to have 25 % of margins, on E-2 day requirement of 45 % margins and finally on E-1 day one needs to have a margin of 70 %. On final expiry day (E) client should have 100% of VaR + ELM +Adhoc margins on contract value in their F&O allocation. If the request for Physical Settlement is made between 9 am to 11 am on expiry day, one has to bring in remaining margin equal to contract value or free shares in demat by 11 am. If physical delivery is not requested, all Long Stock Options at 12 PM and Short Stock Options positions at 2:30 PM will be squared off.

    This has been illustrated below with examples. Assuming 20% VAR+ ELM+ Adhoc margins is required for TCS.

    Day (BOD-Beginning of the day)

    Margins applicable

    Margin Required for TCS ITM 4000 CE for 150 Qty

    Margin Required for TCS ITM 4000 PE for 150 Qty

    E-4 Day BOD

    10% of VaR + ELM +Adhoc margins

    12000

    12000

    E-3 Day BOD

    25% of VaR + ELM +Adhoc margins

    30000

    30000

    E-2 Day BOD

    45% of VaR + ELM +Adhoc margins

    54000

    54000

    E-1 Day BOD

    70% VaR + ELM +Adhoc margins

    84000

    84000

    Expiry day BOD

    100% VaR + ELM +Adhoc margins

    120000

    120000

    Long stock options which are near month ITM (in the money) & CTM (close the money) contracts i.e., within 5% of the spot price, will be applied physical delivery margins

    e.g.: If spot price is Rs. 100 then 100-105 call options and 100-95 put options will be considered as CTM. As the spot price moves up or down, the CTM contract will change accordingly. 

    For short call & short put if client intends to go for physical settlement, client needs to ensure sufficient free shares or margin in their trading account.

    Example: If you have a short call options position in 1 lot TCS 4000 strike price - you have to pay an initial margin to create an open position. If you decide to go for a physical settlement, then you need sufficient free balance in your demat to give delivery of 150 shares.

    Short option positions that are 4 OTM strikes from prevailing SPOT price will be squared off by the system on or after 2:30 PM and the remaining contracts will get expired.

    Example: - If the spot price is ₹100: - Call options from 101 to 104 will be squared off. - Put options from 99 to 96 will be squared off. As the spot price fluctuates, the relevant OTM contracts will adjust accordingly.

    Impact on spread positions in F&O

    ITM (In the money) spread positions will be netted off as the impact of take & give delivery is zero, where the spread ratio is 1:1.

    Margin collection timings for long stock options

    When you buy Options, you pay a premium. The additional margins during the 3 days are collected at 3:15 PM for Options contract which become In the Money (ITM) only. A day before expiry & on expiry day collection of the required margin on ITM option positions will run every hour. If sufficient margins are not there, such positions will be squared off by the system.

    How does Physical Settlement work? How to opt for physical settlement in Futures & options? What happens on the day of expiry for F&O stock contracts? How can I take Physical delivery for my derivative positions in Futures and Options product? Once I place request for Physical Delivery, will all my positions in derivatives be marked for Physical delivery settlement? When can I give the request for Physical delivery settlement in the required contract? Can I give this intent to my Equity Advisor or Relationship manager? Can I place request for part position or specify the number of lots for which I wish to take Physical delivery in the specific contract? What incase if I want to take Physical delivery of only 1 lot or part position in the specified conatrct? What if I want to take Physical delivery of only executed quantity and not the pending orders in the same contract? What if I do not have sufficient margin (shares/ Funds) required for Physical settlement at the time of provisional process run? Where I need to keep the margin (Shares/ funds) required for Physical settlement? What if my shares are blocked for SAM, in case I choose to take delivery in the contract of the same underlying? Will the funds/ shared blocked before EOS run will be final or do I need to keep more funds/ shares? When will I come to know the actual obligation of shares/ funds required for positions which I will receive Physical delivery? What in case if I have placed sell order which got executed in Equity segment, in the same underlying in which shares are payable by me for the contract (Future sell, Option Call sell and Option PUT buy) which I have wish to choose Physical settlement? Do I need to maintain the Long Option Delivery Margins (LODM) in case I have given request of Physical delivery settlement for my Long option ITM contract position? Will I need to maintain intraday MTM margins if I give intent for Physical settlement in any contract? Can I give request for Physical delivery settlement in the next month contracts? Will there be any extra charges on the contract which I wish to take Physical settlement? How can I give delivery request if I have an e-DIS account (POA is not given by me) and I wish to take delivery for Future sell, Option Call sell or Option Put buy contract positions ? How do I know if I am an e-DIS customer? How do I give e-DIS mandate for the Stock shares in my Demat Allocation? What is the validity of the e-DIS mandate given? What in case if I am e-DIS customer and do not take mandate or mandate proves invalid due to any reason? What in case the pending order gets executed and that much free quantity for Physical settlement in not there in my Demat account? What should I do if I want to take Physical delivery of my stock derivative positions? What should I do if I have given intent for Physical delivery by opting 'Choose Delivery' against my open derivative positions but want my position to be cash settled? If I have multiple demat account will the procedure to give delivery intent be same? Once I place request for Physical Delivery, will all my positions in derivatives get marked for Physical settlement? From when can I give intent for Physical settlement in any contract, which I wish should be Physically settled? Can I give this intent to my Equity Advisor? (will this process still be valid or removed) Can I place request for the number of lots for which I wish to take Physical delivery in the specific contract? What incase if I want to take partial Physical delivery of say only 1 lot out of total open lots of 2,3,4 ? What if I do not have sufficient obligation in the form of Shares/ Funds required to meet at expiry for Physical settlement of the opted positions? Where do I need to keep the required delivery obligation in the form of Shares/ funds required for Physical settlement? Will the funds/ shares blocked before the EOS run be final or do I need to keep more funds/ shares as part of physical settlement obligation? When will I come to know my actual obligation of shares/ funds required for positions which I have placed request for Physical delivery? What in case if I have placed sell order which got executed in Equity segment, in the same underlying in which shares are payable by me for the contract (Future sell, Option Call sell and Option PUT buy) against which I have choosen delivery for Physical settlement? Do I need to maintain the LODM margin of 100% in case if I give intent of Physical settlement in Long ITM contract? Will I need to maintain margins required under intraday MTM if I have given intent for Physical settlement in any contract? Can I give intent for Physical settlement in the next month contract? I have an eDIS (non POA) account, can I wish to give delivery intent against my derivatives positions? What are the ways to give mandate if I wish to 'Choose Delivery' for my Shares payable open positions in Future sell, Option CALL sell and Option PUT buy if my account is an e-DIS account? What are the steps required to be followed to complete the mandate in my eDIS account for my shares in Demat Allocation? What happens if I am an e-DIS customer and do not give mandate or mandate proves invalid due to any reason and there is physical delivery for the positions open in my account? What if in case the pending order got executed or my position remained open without sufficient funds/quantity for Physical settlement? Where can I check the status of my request placed for 'Choose Delivery' for Physical settlement? Will I be able to see the final Obligation delivered to me and at what rate? Can I now trade in Futures and Options on BSE? Can I now trade in Index and Stock Futures and Options on BSE? Can NRIs trade F&O on BSE? Will I get reduced margin benefit on spread position taken on BSE? Will I get SPAN margining on BSE if I am mapped to SPAN margining on NSE? Can I Trade BSE derivatives on ICICIdirect platform? What would happen if I placed a sell order which got executed in the Equity segment, in the same underlying in which shares are payable by me for the contract (Future sell, Option Call sell and Option PUT buy) against which I have chosen delivery for Physical settlement? Post End of Settlement (EOS) action taken by I-Sec, can I take positions in FuturePLUS, Future Plus Stop Loss and Option Plus in the contracts eligible for physical settlement? When will I know the actual obligation of shares or funds for positions I’ve requested for physical delivery?
    Which of my open position in stock derivatives will be physically settled? How is settlement obligation computed? What can I do to my positions in near month F&O contracts eligible for physical settlement? What will I-Sec do if I don't take any action on my near month positions of futures and options contracts eligible for physical settlement? Will I-Sec run EOS process for all Physical Settled underlyings at the same day and time? What will happen to my position if Delivery intention is not given and long stock options positions which is CTM and remain open even after EOS process ? What will happen to my position for which I have given delivery intention but due to insufficient funds/shares system marked as Non-delivery which is CTM contract and remain open even after EOS process? How will I come to know what action I-Sec has taken on my positions in near month F&O contracts eligible for physical settlement? Post cancellation and square off action taken by I-Sec, can I again take positions in those near month Future and Option contracts eligible for physical settlement? Post EOS action taken by I-Sec, can I take positions inFuturePLUS, Future Plus Stop Loss and Option Plus in the contracts eligible for physical settlement? What will happen in case my positions remains open in expiring contracts of underlyings eligible for Physical Settlement? Will STT charges be levied in the process of settlement/exercise of F&O by way of physical delivery? Is it mandatory to have demat account to trade in F&O? Is there any delivery margin required for keeping Futures and Options positions open till expiry in physical stocks? Which securities in Futures and Options segment are eligible for physical settlement?
    Can client hold Long option position in securities eligible for physical settlement in Equity Derivative till Expiry? Is there any additional margin requirement to hold the long option positions in securities eligible for physical settlement till expiry? Is this delivery margin applicable on all contracts? How are ITM Options open position identified? From when and how will the delivery margins be levied for physically settled long option positions? Will these margins be levied during the day or at EOD? Where can I see the required delivery margin? Will my long options positions be squared off if LODM is not available? Can I keep shares as margin for LODM margins? What will happen if I have insufficient delivery margin during the day when position is taken? What will happen if I have insufficient delivery margin required at EOD? What will happen if I have sufficient delivery margin required for ITM Option which is Physically marked? Will the LODM be debited from my account? Where will I be able to see the delivery margin levied against my long options positions? Why is my long option position marked in red? Can I square off my position in Long Options position which are eligible for Physical settlement and are marked red? When will the delivery margin be released once blocked for long options position in securities which are physically settled? Will I be able to open new positions in any of the Physically settled scrips after 4 days prior to square off? Will I be allowed to take position and square off on the same day in Options product in these contracts? How will I come to know if my position is ITM and what can I do to safeguard my ITM long option position from being squared off?
    What is physical delivery? What is margin for physical delivery? How the settlement is happens? When can I give a request for Physical delivery settlement in the required contract?
    ✕
    Application status