iifl-logo

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

sidebar image

NSE to re-introduce ‘Do Not Exercise' in stock options

12 Apr 2022 , 01:33 PM

The National Stock Exchange (NSE) said it will reintroduce the ‘Do not exercise’ instruction in stock options from April 28, after discontinuing the practice in October last year.

The move will enable traders to manage their risk better, especially when it comes to out-of-the-money contracts. It will allow them to close their open positions, preventing the risk associated with physical delivery, the stock exchange said in a circular on April 11.

Further, the system, which was introduced in 2017, was a fail-safe for options traders during the time of cash-settlement of options contracts. However, with the introduction of the physical delivery settlement, the system became redundant as the risk of paying securities transaction tax was no longer present.

Under the current system, it was mandatory for traders to either square off their existing in-the-money positions before the expiry of the contract or ensure physical delivery. The situation for a put option buyer holding in-the-money contracts at the time of the expiry was especially grim as he would have to buy the shares from the auction and deliver to the put writer.

Related Tags

  • Do Not Exercise
  • investors
  • NSE
  • NSE re-introduce
  • stock market
  • stock options
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

Knowledge Center
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Capital Services Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Loading...

Follow us on

facebooktwitterrssyoutubeinstagramlinkedintelegram

2025, IIFL Capital Services Ltd. All Rights Reserved

ATTENTION INVESTORS

RISK DISCLOSURE ON DERIVATIVES

Copyright © IIFL Capital Services Limited (Formerly known as IIFL Securities Ltd). All rights Reserved.

IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)

ISO certification icon
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.