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What is physical settlement?
Normally, when your stock futures and options contracts expire, any profits or losses are settled in cash. This is called cash settlement. With physical settlement, instead of cash, you actually receive or deliver the underlying shares.
- Here's a simple breakdown:
- Cash Settlement: You just get or pay money based on how your contract performed.
- Physical Settlement: You either receive the actual shares (if you had a 'buy' contract) or you give up the actual shares (if you had a 'sell' contract).
- Important Points for Physical Settlement:
- Margin Requirements: You need enough funds in your Groww account to cover the full value of the shares, especially as the expiry date approaches.
- Requesting Physical Settlement: By default, Groww settles all F&O positions in cash. If you want to opt for physical settlement, you'll need to request it through the Groww platform. Make sure you have the required margin balance one trading day before the expiry.
For more details, please refer to our comprehensive guide on Physical Settlement.