Physical Delivery vs Assignment?
What does physical delivery mean?
Physical delivery is a term in an options or futures contract which requires the actual underlying asset to be delivered upon the specified delivery date, rather than being traded out with offsetting contracts.
What is physical delivery stock options?
If you decide to go for a physical settlement, then you need sufficient free balance in your demat to give delivery of 150 shares. If you have a short put options position in 1 lot TCS 4000 strike price with 150 quantities, you have to pay an initial margin to create an open position.
What is the difference between physical and cash settlement?
Cash settlement is an arrangement under which the seller in a contract chooses to transfer the net cash position instead of delivering the underlying assets whereas physical settlement can be defined as a method, under which the seller opts to go for the actual delivery of an underlying asset and that too on a pre- …
What is compulsory physical delivery?
All stock F&O contracts on Indian exchanges are compulsory delivery. So if you hold any stock future contract or any stock option contract which is In The Money (ITM) post expiry, you will be required to give or take delivery of the underlying stock².
Do futures require physical delivery?
Most often, the trader will simply pay or receive a cash settlement depending on whether the underlying asset increased or decreased during the investment holding period. In some cases, however, futures contracts will require physical delivery.
What is a constructive delivery?
Constructive delivery occurs when the parties conduct themselves as if a transfer of property has occurred without an actual or symbolic transfer. [Last updated in July of 2021 by the Wex Definitions Team]
What is assignment margin?
The Assignment Margin is the net exercise settlement value payable by a Clearing Member towards interim and final exercise settlement and is deducted from the effective deposits of the Clearing Member available towards margins.
What happens if you dont square off options?
If you don’t square off, you will have to fill up the margin amount as required by the exchange. By doing so, you can carry the short positions in the options till the expiry.
What happens if I don’t square off options on expiry?
You will lose the entire amount paid as premium.
What is Zerodha without exercise option?
Update: NSE has reintroduced Do Not Exercise Facility (DNE) in stock options from April 28, 2022. Physical delivery of stock options can potentially lead to systemic risk in the capital markets and pose a risk to traders.
Can I convert future to delivery?
If you wish to convert your future positions into delivery position, you will have to first square off your transaction in future market and then take cash position in cash market. Another important difference is the availability of even index contracts in futures trading.
What happens if I don’t square off intraday Zerodha?
If you don’t square off an intraday position, our system will attempt to exit it on your behalf as per the timings mentioned here, typically around 3.20 pm every day.
What is the penalty for short selling?
Rs. 1,00,000 per client, whichever is lower, subject to a minimum penalty of Rs.
Short Reporting of Margins in Client Margin Reporting Files.
| Short collection for each client | Penalty percentage |
|---|---|
| (< Rs 1 lakh) And (< 10% of applicable margin) | 0.5% |
| (= Rs 1 lakh) Or (= 10% of applicable margin) | 1.0% |
Can I sell intraday share next day?
If you buy stock on delivery basis, you can pretty much do anything with it. You can keep it for as long as you want, or sell it the next day.
Can I sell delivery shares on same day?
Yes, You can sell delivery shares on the same day without any issues in the stock market. However, Your trade will be considered as an Intraday instead of delivery Regardless of whether the trade is placed in CNC or MIS order type.
Which is better intraday or delivery?
While intraday trading gives the opportunity for low capital accounts and margin payments, delivery trading requires complete amounts for its transactions. As an intraday trader, if one can judge and forecast the value of shares at short and small intervals, then intraday trading is a good idea.
Can I convert delivery to intraday?
Delivery holdings can be converted to Intraday positions only if it is purchased on the same day before the auto square off timing.
What happens if we sell shares before delivery?
As mentioned earlier, if you sell any stock on T day, you are obligated to deliver the shares on T+2. But sometimes it may so happen that you sell some stocks but these stocks are not present in your demat account and hence you would not be able to give delivery of these stocks on T+2 and would end up defaulting.
Can I sell shares without buying in delivery?
The answer is you can still short sell the stock even without having delivery of the stock. But the key question is when to short sell a stock. There are 2 options in front of you. You can either do short selling in spot market or you can do short selling in futures market.
Can I buy same stock after I sold it?
You can buy the same stock back at any time, and this has no bearing on the sale you have made for profit. Rules only dictate that you pay taxes on any profit you make from assets.
Can I short sell in delivery?
That means, you must have clear delivery in your demat account before you can sell the stock. But can you sell without delivery? That is possible in the equity markets; but only on an intraday basis. Short selling is possible in all stocks that are not in the “Z” group or in the Trade to Trade (T2T) segment.
What is the risk in BTST?
The risk with BTST trades is that since you are selling shares that aren’t in your DEMAT account yet, you are relying on the seller whom you bought the shares from to give you the stock.
Can I short in CNC?
No, you cannot short sell using the CNC product code in Zerodha unless you hold the shares in your Demat account. CNC refers to Cash and Carry used for Equity delivery-based trading.
Can I sell CNC shares on same day?
CNC code does not restrict you from selling the stock the same day if desired. But the sell quantity cannot be more than the buy quantity. There is no penalty if you sell the shares on the same day.
Can I convert CNC to MIS?
You can convert the CNC to MIS and execute the sell order with no extra cost. If you bought shares in CNC & some bad news came about the stock at the same time. You can convert the CNC to MIS and execute the sell order with no extra cost.
Does Zerodha charge for CNC?
Zerodha does not charge for Equity delivery (CNC) trades. The brokerage is zero. However, if you have selected the CNC product type and bought and sold the shares on the same day during the market hours , it will be considered an intraday trade(MIS), and intraday brokerage will be charged on your trades.