Friday, December 19, 2025 1:50 pm
As per the SEBI mandate, physical settlement is compulsory if a trader holds a position in any Stock F&O contracts on the expiry date.
What is Physical Settlement?
In a Stock F&O contract, when an open position is not squared off by its expiry date, Physical Settlement takes place. This implies that a trader must physically deliver or take delivery of Stocks to settle open transactions, rather than settling them with cash.
Examples of physical settlement:
Futures
Long positions of 1 lot of Reliance, 250 quantity at ₹2000, i.e. ₹5 lakh contract value.
F&O = 20% charges, i.e. ₹1,00,000. This means you are required to give ₹1 lakh. But if you opt for physical settlement, you’ll have to provide the complete contract value of ₹5 lakh.
Short positions of 1 lot Reliance 250 quantity at ₹2000, i.e. ₹5 lakh contract value.
F&O = 20% charges, i.e. ₹1,00,000. This means you are required to give ₹1 lakh. However, if you opt for physical settlement, you must hold 250 shares of Reliance in your Holdings and maintain a ₹1 lakh margin until the expiry date.
Options
Long - 1 lot of Reliance, 250 quantity for a strike price of ₹2000 Call (CE) Options.
If the underlying price of Reliance is greater than the strike price of ₹2000, then the contract is said to be ITM (In-The-Money). If you wish to go for physical settlement, you need to maintain a free ledger balance of ₹5 Lakh in your account; otherwise, physical settlement will not be done.
Long - 1 lot of Reliance, 250 quantity for Strike price of ₹2000 Put (PE) Options.
If the underlying price of Reliance is less than the strike price of ₹2000, then the contract is said to be ITM (In-The-Money). If you wish to go for physical settlement, you need to provide the Stocks (shares) equal to the lot quantity positioned to be available in the Demat account; otherwise, physical settlement will not be done.
Please note --
- Short ITM PE Options would be treated the same as Long ITM CE Options. A free ledger balance equal to the contract value is to be maintained.
- Short ITM CE Options would be treated the same as Long ITM PE options. Your Holdings should have the lot quantity needed for physical settlement in your Demat account.
What is the process for Physical Settlement on Upstox?
To opt for physical settlement on Upstox, you need to provide your consent first and here are the details for the same:
- To provide your consent for physical settlement of open Stock F&O contract(s) with December 2025 expiry, visit the ‘Profile’ section on your Upstox account on our App / Web and consent from here before EOD on Sunday, 28 December 2025.
- Based on your consent, Upstox will evaluate whether your position qualifies for physical settlements and if there are sufficient ledger balances/holdings (whichever is applicable) available.
- Kindly plan your trades, keeping in mind that you will not be able to trade in fresh positions in the current December 2025 expiry of F&O contracts from Monday, 29 December 2025 onwards.
- Correspondingly, position conversion(s) on carry forward of any stock futures positions shall also not be permitted.
What other impact could this have on your positions?
Your position will automatically be squared off on expiry day at 12:00 PM in case:
- You have not provided your consent for physical settlement
- You provided your consent for physical settlement and do not have Ledger Value (equal to contract value) / holdings available for the physical settlement of your positions.
- In case funds/holdings are not available for all the open positions, we will execute square-offs for all the positions. Thus, no partial funds/holdings evaluation for the expiring positions will be considered by our team.
What else to keep in mind?
Delivery margins would be applicable as per Exchange norms on all the existing long ITM (In The Money) stock option positions in a staggered manner, as explained below:x`
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10% of delivery margins computed on expiry -4 days EOD (Wednesday)
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25% of delivery margins computed on expiry -3 days EOD (Thursday)
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45% of delivery margins computed on expiry -2 days EOD (Friday)*
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70% of delivery margins computed on expiry -1 day EOD (Monday)*
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To avoid margin shortages, Upstox would be blocking such (above-mentioned) delivery margin from the Beginning of the Day (BOD) instead of the End of the Day (EOD).
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If the positions are not squared off for any reason (e.g. non-liquidity), then the contract would have to be settled physically, and you would be liable to pay the entire settlement amount.
*If you have opted for physical settlement, you would be required to fulfil the entire funds (contract value) / holdings requirement by EOD on Sunday, 28 December 2025.
In the case of spread contracts, you are advised to provide margins for both legs since the risk of one leg being squared off by you at any time would result in the physical settlement of the other leg.
Brokerage in Physical settlement:
Since there is a substantial increase in effort and risk to settle these F&O positions resulting in physical delivery, if F&O positions result in physical delivery, brokerage will be 0.25% of the physically settled value. For all the netted-off positions, brokerage will be 0.1% of the physically settled value. All physically settled contracts (Futures & Options) will also carry an applicable Exchange charge.
And that’s all. Keep a watchful eye on this page for more updates from Upstox!
Tuesday, December 16, 2025 3:07 pm
Please note that all ITM, ATM & CTM CRUDEOIL and CRUDEOILMINI option contracts expiring today, 16th December 2025, will be converted into futures contracts. You can create fresh positions only until 9 PM today.
To avoid the square-off of your positions, please ensure you maintain sufficient margin for the futures contracts before 9 PM today if you have any open Positions.
Monday, December 8, 2025 9:12 pm
Starting 8 December 2025, there’s a change in how exposure (Open Interest) will be calculated for F&O stocks that enter the Ban Period.
What’s new?
- Earlier, exposure was measured only by counting contracts at the end of day.
- Now, exposure will be calculated more accurately using Future Equivalent Open Interest (FutEq OI)
- This considers both Futures and Options together using delta
- Compliance checks will now happen multiple times during the day, not just at the close
What it means for you:
If a stock goes into a Ban Period:
- No new positions or rollovers allowed
- You can square off existing positions
- If only one side of a hedge is squared off which results in an increase in FutEqOI, your pending orders may be cancelled, and positions may be auto-squared off after 2 PM (as per risk policy).
What penalties might you face:
Any increase in exposure beyond permitted levels in the Ban Period may attract penalties, recoverable from the client.
Example:
Let’s say you have positions in a stock that suddenly enters the Ban Period.
Your positions:
- 2 lots Buy: Futures (January expiry)
- 2 lots Buy: Call Options (January expiry)
- 2 lots Sell: Futures (February expiry)
On the next day (T+1), the stock enters the Ban Period.
What happens now?
- You cannot take any new trades in this stock
- You can square off (close) your existing positions
- But if you close only one part (for example, you square off January Futures but keep February Futures open), your exposure may increase
If exposure increases:
- Your pending orders in that stock may be cancelled after 2 PM.
- Positions may be auto square off as per risk rules.
- You may also face penalties, which can be recovered from you.
Why does this matter?
Since exposure is calculated on a delta-based basis, any change in one part of a hedge may affect your overall exposure.
Note: This example is only to help you understand how the new rule works.
For more details, please refer to the circular here.
Friday, December 5, 2025 2:46 pm
The global outage that impacted brokers across the industry now seems to be resolved. Further updates will be posted here.
Thursday, December 4, 2025 12:16 pm
Starting 8 December 2025, traders on Upstox can participate in the new NSE pre-open session for index and stock futures.
What does this mean?
Typically, markets open at 9:15 AM and close at 3:30 PM. Pre-open is a 15-minute window before the market opens, from 9:00 am to 9:15 am. During this period, traders can place, modify, or cancel orders, but trades don’t happen immediately.
Instead, the system collects all buy and sell orders and determines a single opening price (called the equilibrium price) based on demand and supply.
Until now, the pre-open window has existed only for Equities. But with NSE rolling this out for futures, you can now place pre-order futures trades too.
Which futures contracts are included?
- Current-month stock & index futures
- Next-month futures (only in the last 5 trading days before expiry)
Not included
- Options
- Far-month futures
- Spread contracts
- Futures of stocks undergoing a corporate action (merger, demerger, etc.) on that day
How is the opening price decided?
The system picks the price where the maximum buyers and sellers match.
If multiple prices qualify, the exchange selects:
- Price with the fewest unmatched orders
- If still tied, the price closest to yesterday’s closing price
- If no match happens in pre-open, the first trade in the normal session becomes the opening price.
Example:
If buyers and sellers both match for 500 NIFTY Futures contracts at ₹25,500, then ₹25,500 becomes the opening price.
What happens to unmatched orders?
- Any limit order that doesn’t get matched will simply move to the normal market.
- Market orders will be converted into limit orders at the opening price that was discovered.
- If no opening price is found, the market orders will move to the normal session using the previous day’s closing price.
Summary of what this means for traders
- From 08 Dec 2025, F&O traders will get a 15-minute pre-open window (9:00–9:15 AM) on NSE for index and stock futures
- This means you can place or modify orders before the main session, with a fair opening price determined by a call-auction, similar to equities today
- Helps in better price discovery, reducing opening volatility, and giving more transparency (especially useful for overnight global cues, gap-ups/downs, etc.).
For reference, you can check out the circular here