Announcements

The Exchange will discontinue Stop Loss orders with Market condition (SL-M) for Option contracts from 27th September 2021.

Here’s what this means for you: 

1. Orders placed with aforesaid condition, if any, will be rejected by the Exchange with message - as ‘Stop Loss Market (SL-M) orders are not allowed by exchange on stock and index options. Please place a Stop loss limit (SL-L) order instead.’

2. The change is applicable only for orders placed in Index options and Stock Options contracts

3. Stop Loss orders with limit condition (SL-L) will continue to remain available for all contracts

Bharti Airtel Limited (BHARTIARTL) conducted a meeting with its Board of Directors on 29th August, 2021. As per this meeting, it has declared to the Exchange that it will announce a rights issue  in the ratio of 1:14, i.e 1 rights equity share for every 14 equity shares held at an issue price of Rs. 535 per equity share. The record date for the purpose of determining the shareholders who will be eligible to apply for the rights shares is 28th September 2021.

What is a rights issue?
A company announces a rights issue to invite existing shareholders to buy more shares, usually at a discounted price. These shares are known as rights equity shares.  To learn more, click here.

How does this corporate action impact Futures & Options Contracts?

Impact on Futures Contract: 

• The adjusted futures base price shall be arrived at by multiplying the old futures base price by the adjustment factor. 
• The adjusted market lot shall be arrived at by dividing the old market lot by the adjustment factor. The revised market lot would be 1886

Impact on Options Contract: 

• The adjusted strike price shall be arrived at by multiplying the old strike price by the adjustment factor.
• The adjusted market lot shall be arrived at by dividing the old market lot by the adjustment factor. The revised market lot would be 1886

The details of the adjustment factor computation and revised option strike prices available for trading BHARTIARTL from 27th September 2021 are given in Annexure-1 of the circular here.

For all positions taken before 27th September 2021, you may see a slight deviation in the carried forward (c/f) average price of BHARTIARTL due to the corporate action mentioned above.

As per a SEBI mandate, physical settlement is compulsory if a trader holds a position in any Stock F&O contracts on 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:

Future

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 lakhs.

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 quantity of Reliance and Rs. 1 lakh margin money till expiry date.

Option

Long - 1 lot of Reliance, 250 quantity for 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 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 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 positioned 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 September-2021 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 28th September 2021.
• Based on your consent, Upstox will evaluate whether your position qualifies for physical settlements and if there is sufficient  ledger balances / holdings (whichever applicable) is available.
• Kindly, plan your trades keeping in mind that you will not be able to trade in fresh positions in the current September 2021 expiry F&O contracts from Wednesday, 29th September 2021 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 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 a 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 Beginning of the Day (BOD) instead of 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, 28th September 2021.

In case of spread contracts, you are advised to provide margins for both the legs  since the risk of one leg square off by you anytime would result in 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 physical 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!

Starting today, 20th September 2021, you can now place intraday orders with up to 5x* leverage on all NSE 500 stocks!

What’s changed?

Earlier we offered up to 5X leverage only on equity stocks listed under the F&O segment, but now you can avail up to 5X leverage to place intraday orders on all NSE 500 stocks. 

Happy Trading! 

*Please note: Leverages are subject to change without prior notice at Upstox’s discretion. 

We are conducting a scheduled upgrade & maintenance activity on 18th September 2021 from 9.30 AM to 12.30 PM to ensure that you can enjoy a seamless trading and investing experience on Upstox. During this time you may not be able to login to the Upstox mobile app & desktop platform. Thank you for your patience.