Why can't I use the options premium received from selling the options contract?
If you've sold an options contract and noticed that the premium received isn’t available for trading, it’s due to updated regulations from the exchange. These rules ensure better risk management by temporarily restricting access to premiums from certain in-the-money (ITM) or out-of-the-money (OTM) options.
Exchange Rule on Premium Blocking
As per NSE circular CMPT40245, the Clearing Corporation may collect the net option value in cash if the strike price is significantly away from the underlying's closing value.
When is Premium Held as Cash Collateral?
| Threshold (Strike Distance from Underlying) | Applicable Contracts |
|---|
| 40% or more | All contracts (index and stock) |
| 30% or more | Index contracts (expiry: 9 months to 2 years) |
| 20% or more | Index contracts (expiry: up to 9 months) |
What Happens to the Premium?
A debit entry will appear in your ledger with the narration:
"Collection of Option Value for ITM/OTM options in Cash"
Example:
If Nifty50 is at 23,600 and you sell:
- A call with a strike price above 33,040 (40% higher), or
- A put with a strike price below 14,160 (40% lower),
then the premium received will be held as cash and unavailable for other trading activities.
What if...
| Scenario | Outcome |
|---|
| You sell an option within 20–40% strike threshold | Premium may be blocked based on tenure and index type |
| You square off your short option position | Blocked premium is proportionately released |
| You sell an option outside the mentioned thresholds | Premium is available for trading as usual |
Important: These rules apply only to overnight (carryforward) short positions. Intraday trades are not affected.
For more information, refer to the detailed follow-up NSE circular.
Last updated: 27 Jun 2025
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