What happens if I don’t square off my F&O positions before expiry?

If you don’t square off your F&O positions before expiry, the outcome depends on the type of contract and its position:

Futures: Futures contracts are automatically settled at the expiry price. This means your position will be closed at the market price at the end of the trading day, and the profit or loss will be reflected in your account.

Options: In the case of options contracts, the consequence of not squaring off depends on whether it is In-The-Money (ITM), Out-Of-The-Money (OTM), or At-The-Money (ATM)

In-the-Money (ITM) Options:

• Stock Options: If you hold an ITM call option, you’ll be assigned the underlying shares. If you hold an ITM put option, you’ll be obligated to deliver the shares.   
• Index Options: Cash settlement will occur based on the difference between the strike price and the underlying index value.

Out-of-the-Money (OTM) and At-The-Money (ATM)  Options: OTM and ATM options expire worthless, and you’ll lose the premium paid.

Consequences of Not Squaring Off:

• Potential Losses: If the market moves against your position, you could incur significant losses.   
• Physical Delivery Obligations: For ITM stock options, you may be required to deliver or receive shares, which can have implications for your margin requirements and tax liabilities.   
• STT Charges: STT is charged on exercised ITM options contracts at 0.125% of the intrinsic value.

It is advisable to plan the exit of your F&O contracts before expiry to avoid any unnecessary losses, additional charges, and slippages during high volatility expiry week. Share India’s trading platform gives access to various tools for F&O contracts so that you can optimise your entry and exit positions and make better trading decisions. 

To get started with Share India, visit us here. 

For assistance, reach out to Share India’s support team via email at support@shareindia.com or by phone at 1800 203 0303.