What will happen if I don't square off my Options contract on the expiry day?
If you don’t square off your options positions on the expiry day, the position will settle automatically based on the exchange's determined price. The difference between the settlement price and your entry price will be reflected in your trading account ledger as profit or loss.
Key Points to Remember
In The Money (ITM) Options
- ITM options will undergo physical settlement.
- The underlying stock will be transferred to or from your Demat account, depending on whether you're holding a call or put option.
- For more details on physical settlement, refer to our blog on physical settlement policies.
Out of The Money (OTM) Options
- OTM options contracts will settle at zero.
- No physical settlement or transfer will occur, and any remaining value will be lost.
Always be proactive about squaring off options contracts before expiry to avoid unwanted settlements or losses.
What if...
| Scenario | Outcome |
|---|
| You don’t square off an ITM option | Physical settlement occurs, and underlying shares are transferred to/from your Demat account |
| You don’t square off an OTM option | The option expires worthless, and you lose the premium paid |
| You miss the expiry deadline | The position settles automatically, and you may face unwanted consequences in your Demat or trading account |
Last updated: 27 Jun 2025
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