Auto Squaring off options on expiry day

I need some clarity on below scenario.

Sort a iron fly

@3:25 try to squareing off the positions but one otm put option was not sold coz prices was .05 and there was no buyers. So I want to know

what will happen next.
Is there any penalty on me.
Do i have to pay anything.


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Don’t worry it doesn’t affect u at all… :wink: u just saved brokerage + taxes on that leg :stuck_out_tongue: :slight_smile:

in index option, Square off should be done in the ITM Sold or ITM BUY! & even though u can’t able to square off those options for any reasons , it’s not that dangerous like stock options.

while dealing in the stock options , just stay cautious , Never keep open position for ITM options (bought or sold for both i am saying) even some options go ITM in last few minutes & there can be no Buyer seller in that particular stock so beware. particularly if u have PE buy , if PE buy goes into ITM in the last minutes , you need to provide the delivery of that stock which is not with u in your demat , so exchange will first buy that stock in the auction after 1 day, then it takes time to get credited in the demat then u deliver that stock to the person u bought PE. (& in this process if that stocks move sharply in 1-2 days u loose a lot even in the option buying) that’s y brokers don’t allow Normal delivery orders in the last week. so if u stay cautious in Such scenarios, there is no big worry for u in the upcoming days !

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@Dhan_Help , What if a normal buy OTM position is not squared off on expiry, when will it move from open positions?

Hi @yogaikey

The OTM contract ends on the expiry day, the value will be zero by the end.

So, if you fail to square off the position during market hours, the settlement of the position will occur from the end of the exchange.

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Hi @Naman
need your help on below OTM stock option., am not able to close this. what will happen…, M&MFIN 28 MAR 340 CALL NSE Buy Normal 4000qty at 0.05
@Divyesh pls help

Hi @Praveenmb1988 welcome to MadeForTrade community!

All out of the money (OTM) option expires worthless on expiry day and there is no delivery obligation. Further, you may refer our RMS policy on physical settlement here

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@Poornima Thank you very much for reply., if i was not able to exit then its not a issue right.,
i had bought MFIN 28 MAR 340 CALL NSE Buy Normal 4000qty at 0.05
so it will be closed by system right at the EOD?

Hi @Praveenmb1988,

As the strike price is an OTM (Out the money) contract, it will be settled at 0 by exchange.

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@Sameet thank you for ur reply but why am getting this mail today

Dear Praveen,

Greetings from Dhan.

Here’s your combined margin shortfall: Rs 195887.52.

Please ensure you make payment before market opens to avoid square off by our systems.

This is a system generated email, please do not reply to this. Incase of any queries or discrepancy, please write to us on []

@Sameet @Poornima can you pls check above message & help me…, am new to these things

Hi @Praveenmb1988,

Since you have an OTM contract, there is no action required from your end. In case of ITM & ATM contracts, you need to maintain the required funds to avoid square-off.

We have mentioned about the margin in our Risk policy :
On Expiry day, delivery margin will blocked for all long stock option positions ( ITM, ATM, OTM) and will be calculated as per Exchange defined norms of VAR+ELM % of underline stock or 20% whichever is higher.

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Thank you very much for ur explanation. god bless u :slight_smile:

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Most welcome!

Just to add, if there is any risk involved with an OTM contract (risk of becoming an ITM) on expiry day, the risk team may square it off.

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