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What is the Share.Market physical settlement policy?
When you trade stock options or futures, reaching the final deadline (expiry) triggers a process called physical settlement. This means you must actually buy or sell the actual stock holdings from your demat account.
To complete this, you cannot just use the initial margin you paid to open the trade. You must have the full cash amount (or the actual shares) in your account. Because these contracts represent large quantities of stock, holding them until expiry significantly increases your financial risk.
To manage this risk, the following Share.Market physical settlement policy will be followed:
| Timeline | Action Taken | Affected Positions & Details |
| E-4 (Expiry Day – 4) | Physical delivery margin starts | Margins are blocked for all current-month In-The-Money (ITM) and Close-To-Money (CTM) stock options. |
| E-1(Expiry Day – 1) | 35% value blocked & last trading day | 35% of the total contract value is blocked for all long stock options (including up to 3% OTM) and traders can continue normal F&O trading until the end of this day. |
| Expiry Day | 100% value blocked & positions blocked | 100% of the contract value is blocked for all open stock futures and stock options (including up to 5% OTM) but no new F&O positions can be opened (except futures intraday). |
| Anytime | Auto square-off | Any open positions that face a margin shortfall due to these physical delivery requirements will be squared off automatically. |
| Market Holiday during Expiry Week | Margin requirement deadlines shift to the prior trading day. | If a trading day is a holiday, margin deadlines shift to the immediately preceding trading day. |
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