Strike Out Date Settlement For Free

Settlement by physical delivery is carried out by clearing brokers or their agents. Promptly after the last day of trading, the regulated exchange's clearing organization will report a purchase and sale of the underlying asset at the previous day's settlement price.

Having two positions with different obligations will net-off the physical settlement obligation if both positions expire ITM. If one option expires ITM, and other OTM then it will be physically settled. If both expire OTM, the options will expire worthless and there won't be any physical settlement.

In a physical settlement, the following transactions take place: Taking Delivery: As a buyer, you take the delivery of the stocks after the expiration date. The stocks are credited to your Demat account. In this case, the contracts are Long ITM (In-the-money) call, Long ITM put, and Long Futures.

Cash settlement: If at expiry, the option is in-the-money (ITM), the position will be considered as exercised and randomly assigned to a seller. The net amount to be paid is equal to the intrinsic value of the option. Option settlement period is T + 1 day; where ?T? stands for trading day.

What is physical settlement? In a Stock F&O contract, when there is an open position that has not been squared off by its expiry date, physical settlement takes place. This implies they have to physically give/take delivery of Stocks to settle the open transactions instead of settling them with cash.

For options positions that expire out-of-the-money (OTM) or at-the-money (ATM), the options premium will be zero. In this case the buyer will lose the entire premium paid whereas the seller will retain the entire premium received.

Having two positions with different obligations will net-off the physical settlement obligation if both positions expire ITM. If one option expires ITM, and other OTM then it will be physically settled. If both expire OTM, the options will expire worthless and there won't be any physical settlement.

When you buy using TAS, you agree to take a long position in the futures contract at the settlement price (+/- the offset), and your trading counterpart agrees to take a short position at the same price. The exchange acts as the counterparty for both traders, with a margin deposit in place.