In last few mins, I sold IDFCFirstbank 68 PE @0.30. As there was less liquidity and I expected that the stock may give closing less than 68 Rs and my contract will be exercised, I sold IDFCFirstbank May Futures @67.95.

But now IDFC First Bank has given closing on 68.00. Now i am confused what will happen to my 2 open positions. The short futures against short put will be adjusted against each other or I will get entire 30 paise in my put contract but my futures contract will get exercised and I will get delivery of 15000 shares.

If the latter happens , then is there any way to avoid delivery of shares or hedge against huge position.

Thanks

Hi @Aditya_Gupta, the 68 PE will expire worthless and you will get to keep the entire premium recieved.

For the Futures position, you will have to give delivery of underlying shares. If you don’t take sufficient shares in your account to give delivery, this will result in short delivery. You can learn all about short delivery here:

Once the markets are closed, there’s nothing you can do.

but shouldn’t the 68 PE be treated In the Money?

And if not, then 150000 shares will be purchased at 68rs or shares will be auctioned off??

For the Put option to be ITM, the price should be lesser than the strike price. In this case, it isn’t so it will expire worthless.

You hold a short futures position, so you will have to give delivery of shares. If you hold the shares, it’ll be at Rs. 68, this is the final closing price of IDFCFIRSTB today and also the settlement price.

If you don’t hold the shares, then they will be auctioned in which the auction penalty can be up to 20%. Have shared the article explaining about short delivery above. Would suggest you read it for better understanding.

I dont hold the stock. When will the auction takes place and do I need to put a buy order in the auction market or will Zerodha do it on my behalf.
Also if I purchase 15000 shares tomorrow morning then will those shares be netted against my today’s short delivery?

The broker does it and you have to have it in your demat account.