Announcements

As per SEBI’s recent circular, the benefits of a calendar spread on expiry day will no longer be available for traders.

What is a Calendar Spread?
A calendar spread is when you take two positions on the same asset but with different expiry dates. This helps reduce margin requirements because the positions hedge each other.

Here’s an example to understand this better:
Let's say you're trading NIFTY Options:
- You BUY 1 lot of 24000 NIFTY Call expiring in February (near-term contract)
- You SELL 1 lot of 25000 NIFTY Call expiring in March (far-term contract)

If you trade in these contracts separately, you would have to maintain a 100% margin for each contract. But since this is a hedged position (long in one contract, short in another), the Exchange provides a calendar spread margin benefit, meaning you only need to maintain a reduced margin.

What’s changing?
On the expiry day of one of your contracts, the Exchange will remove the margin benefit for that contract. This means you’ll need to maintain a 100% margin for the remaining contract.

How does this impact you?
On the expiry day of your near-term contract (e.g., February contract), the margin benefit will be removed. You’ll need to maintain the full margin for your remaining contract (e.g., March contract).

If you don’t have enough margin, your position may be squared off automatically.
Please ensure you check your margin requirements before the expiry day!

To learn more, refer to the SEBI Circular

The MCX Exchange has made a key adjustment to the tender period for Base Metal contracts under the Staggered Delivery System. Here's what it means:

What is the tender period?

The tender period is the window during which sellers in commodity futures contracts can notify the exchange about their intention to deliver the commodity physically. Buyers need to be prepared to accept the delivery during this period.

What’s the change?

Previously, the tender period for Base Metals contracts was 5 days. Starting January 2025, this period has been reduced to 3 days for contracts expiring from January 2025 onwards.

Why is this important?

• - To reduce the tender period for quicker delivery of commodities, streamlining the settlement process
• - To align with the delivery process with global best practices, improving market efficiency

Commodities Affected

The change applies to all Base Metals contracts, including:

• - Aluminium
• - Copper
• - Lead
• - Nickel
• - Zinc
• - Steel Rebar

Effective Date

This change will take effect for contracts expiring in January 2025 and beyond.

For further details, refer to the MCX circulars here.

On account of the Union Budget announcement on Saturday, 1 February 2025, markets will remain open!

What does this mean 👉 NSE, BSE and MCX are holding a special LIVE trading session in the Equity, Derivative (F&O) and Commodity market segments on Saturday

Why is this happening 👉To provide traders with the opportunity to react in real time to the Union Budget Announcement.

What are the timings 👉 Markets will be open as usual from 9:15 AM to 3:30 PM. Here are further details:

Keep in mind

While everything will be just like a regular trading session, there are a few important things to consider before trading on 1 February 2025:

Transaction related details

• - Our Call & Trade services will be available as usual from 8 AM TO 5:30 PM
• - Credits from the F&O segment, intraday profits, and proceeds from sell transactions on 31 January 2025 will not be available for trading; they will be settled on 3 February 2025
• - Stocks bought on 31 January 2025 will not be available for selling on 1 February 2025, but will be visible in your holdings. This includes Stocks bought via MTF.
• - Stocks bought on 31 January 2025 will not be available for selling on 1 February 2025, but will be visible in your holdings
• - Standard Fund Withdrawal requests placed after 8 AM on 31 January 2025 will be processed on 3 February 2025
• - Instant Fund Withdrawal will not be available on this day
• - Ensure you keep your TPIN handy. Don’t know your TPIN? Generate one by following the steps mentioned here. 
• - Due to volatility on this day, there might be a delay in receiving OTPs. To sell Stocks without TPIN and OTP, enable DDPI a few days in advance. Learn more about DDPI here
  

Margin details

• - Up to 4X leverage via Margin Trading Facility (MTF)
• - Equity: Up to 2X margins on Intraday orders
• - CO & OCO orders: Blocked for the day
• - Margin pledge (pledging and unpledging) will be unavailable

Know more: NSE, BSE, MCX

All ITM NATURALGAS/NATURALGASMINI Option contracts on 24th Jan 2025 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.

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 January  2025 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 28 January 2025.

- 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 January 2025 expiry F&O contracts from Wednesday, 29 January 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 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, 28 January 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 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!