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

Stock options on individual securities in India, upon expiry, are currently settled in which manner?

Stock options and stock futures in India are physically settled at expiry. In-the-money positions lead to delivery of the underlying shares, whereas index derivatives are cash settled in rupees.

  1. APhysical delivery of the underlying sharesCorrect
  2. BCash settlement of the difference in rupees
  3. CSettled by rolling over to the next month automatically
  4. DSettled by auction on the exchange

Explanation

Stock derivatives in India are compulsorily physically settled on expiry, so in-the-money positions result in delivery obligations. Index derivatives, by contrast, are cash settled. Auction and automatic rollover are not the settlement method.

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