Skip to content

NISM Certifications · NISM-Series-VIII: Equity Derivatives · Introduction to Clearing and Settlement System

For stock options on individual securities traded on Indian exchanges, which statement about final settlement at expiry is correct under current SEBI norms?

Stock options are physically settled, meaning the underlying shares are delivered at expiry for in-the-money contracts. This follows SEBI's framework under which stock derivatives are physically settled, while index derivatives continue to be cash settled in rupees.

  1. ASettlement is in cash only for all stock derivatives
  2. BStock options are settled by physical delivery of the underlying sharesCorrect
  3. CStock options are settled by delivery only if the buyer requests it
  4. DSettlement is by delivery of the underlying only on the trading holiday after expiry

Explanation

Under SEBI's framework, stock derivatives (futures and options on individual stocks) are physically settled. Index derivatives remain cash settled. Physical settlement is not at the buyer's option and is not tied to a holiday.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Clearing and Settlement System shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Clearing and Settlement SystemFree diagnostic mock

More Introduction to Clearing and Settlement System questions