Announcements

As per a 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 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.

Examples of physical settlement:

Futures

Long positions of 1 lot of Reliance, 250 quantity at Rs. 2000 i.e. Rs. 5 lakh contract value

F&O = 20% charges i.e. Rs. 1,00,000. This means you are required to give Rs. 1 lakh, but if you decide to physically settle then you need to have a complete contract value of Rs. 5 lakh.

Short positions of 1 lot Reliance 250 quantity at Rs. 2000 i.e. Rs. 5 lakh contract value

F&O = 20% charges i.e. Rs. 1,00,000. This means you are required to give Rs. 1 lakh, but if you decide to physically settle then you need to have the holdings of 250 quantities of Reliance and Rs. 1 lakh margin money till the expiry date.

Options

Long - 1 lot of Reliance, 250 quantity for a strike price of Rs. 2000 Call (CE) Options.

If the underlying price of Reliance is greater than the strike price of Rs. 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 Rs 5 Lakh in your account, else physical settlement would not be done.

Long - 1 lot of Reliance, 250 quantity for Strike price of Rs. 2000 Put (PE) Options.

If the underlying price of Reliance is lesser than the strike price of Rs. 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, else physical settlement would not be done.

Please note -- 

- Short ITM PE options, treatment would be similar to Long ITM CE options.
Free ledger balance equal to the contract value to be maintained.

- Short ITM CE options, treatment would be similar to Long ITM PE options.
Holdings shares of lot quantity need to be available in 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 November 2024 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 26 November 2024.

- Based on your consent, Upstox will evaluate whether your position qualifies for physical settlements and if there is sufficient ledger balances / holdings (whichever applicable) are available.

- Kindly, plan your trades keeping in mind that you will not be able to trade in fresh positions in the current November 2024 expiry F&O contracts from Wednesday, 27 November 2024 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 of funds/holdings not being 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:

- 10% of delivery margins computed on expiry -4 days EOD (Friday)

- 25% of delivery margins computed on expiry -3 days EOD (Monday)

- 45% of delivery margins computed on expiry -2 days EOD (Tuesday)*

- 70% of delivery margins computed on expiry -1 day EOD (Wednesday)*

- To avoid margin shortages, Upstox would be blocking such (above-mentioned) delivery margins from the Beginning of the Day (BOD) instead of the End of the Day (EOD).

- 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 amount of the settlement.

*If you have opted for physical settlement, you would be required to fulfil the entire funds (contract value) / holdings requirement  by  EOD on Tuesday, 26 November 2024.

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 physical settled value. For all the netted-off positions brokerage will be 0.1% of the physical 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!

All ITM NATURALGAS/NATURALGASMINI Option contracts on 21st November 2024 will be converted into Futures contracts.

To avoid square-off, ensure that you maintain sufficient margin for the Future contracts before 10.00 PM today.

On account of Assembly Elections in Maharashtra, Wednesday, 20 November 2024 is a trading holiday

Keep in mind:

🔸 Equity and Derivatives markets will be closed on 20 November. The Commodity markets will be closed only during the morning session
🔸 Equity and Derivatives trading will resume on 21 November. Commodity trading will reopen on 20 November in the evening session from 5:00 PM to 11:30/11:55 PM
🔸Standard Fund Withdrawal requests placed after 8 AM on 19 November will be processed on 21 November
🔸Instant Fund Withdrawal facility will not be available on 20 November

Note: New F&O index lot sizes apply from 21 Nov. Tap here for details.

If you recently participated in the Tata Motors merger and noticed you may have received fewer shares than expected, you’re not alone. This can be confusing, but it’s due to some shares being sold to cover the Tax Deducted at Source (TDS) on deemed dividends (amounts treated as dividends for tax purposes, even if not actually paid out). To help you understand why this happened and how it affects you, here’s a simple breakdown:

Q: What was my expected share allocation?
A: For example, if you owned 100 Tata Motors DVR shares at ₹100 each (totalling ₹10,000), you were expecting to get 70 Tata Motors shares based on the 10:7 swap ratio from the merger.

Q: What are deemed dividends and how does TDS work?
A: During the merger, part of the company’s profits was treated as deemed dividends. If the deemed dividend was ₹20 per DVR share, your total deemed dividend for 100 shares would be ₹2,000. The company deducts 10% TDS (which is ₹200) to pay to the government on your behalf. You can claim this back when filing your taxes.

Q: Why were some of my shares sold?
A: To cover the ₹200 TDS, the company sold about 1 of your Tata Motors shares. If the share price was ₹500, they sold 1 share for ₹500.

Q: How many shares did I receive after the sale?
A: You initially expected 70 shares, but after selling 1 to cover TDS, you ended up with 69 shares.

Q: What happens to any leftover money from the sale?
A: Any extra money from the sale of shares will be credited to your bank account within 45 to 60 days.

Q: How do I calculate my new average price per share?
A: Your total investment was ₹10,000 for 100 DVR shares. After the swap, the new average price per share is calculated as:

- New Average Price = ₹10,000 ÷ 70 = ₹142.86 per share.

Q: How will taxes apply when I sell my shares?
A: If you sell your 69 shares at ₹600 each, here’s how your profits work out:

1. Capital Gain per Share:
Selling Price - New Average Price = ₹600 - ₹142.86 = ₹457.14.
This means you make ₹457.14 profit on each share.

2.Total Capital Gain for 69 Shares:
69 shares × ₹457.14 = ₹31,428.66.
So, your total profit from selling all 69 shares is ₹31,428.66.

3.Adjusting for Deemed Dividend:
From your total profit, you need to subtract the ₹2,000 deemed dividend.
Adjusted Capital Gains = ₹31,428.66 - ₹2,000 = ₹29,428.66.

This ₹29,428.66 is what will be taxed as Long-Term Capital Gains (LTCG). If your total LTCG for the year is under ₹1 lakh, you might not have to pay any tax on it!

On account of Guru Nanak Jayanti, Friday, 15 November 2024 is a trading holiday 

Keep in mind: 

🔸 Equity and Derivatives markets will be closed on 15 November. The Commodity markets will be closed only during the morning session

🔸 Equity and Derivatives trading will resume on 18 November.

🔸 Standard Fund Withdrawal requests made after 8 AM on 14 November will be processed on 18 November

🔸 Instant Fund Withdrawal will not be available on 15 November