What will happen if I don’t square off my Option contract on expiry day?

Here is what happens if you do not square off your Option contract:

1. If the contract is in the money and is eligible for physical settlement:

The contract will be physically settled.

2. If the contract is not settled through delivery, then:

If you have bought options:

In the money:
STT (Securities Transaction Tax) will be charged at 0.125 percent of the intrinsic value (the amount by which the option is in the money).

Out of the money:
The option will expire worthless. You will lose the entire premium paid.

If you have shorted options:

STT was already paid when you sold the option, so there is no STT impact at expiry.

If the option expires out of the money, you keep the premium received

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