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

There could be two scenarios:

1. You have purchased a call option that is in the money (meaning that the strike price is below the current market price). In this case, Physical settlement would occur, meaning that you would receive the underlying stock at the strike price. However, if physical settlement is not possible, there could be several implications: First, if the option buyer does not receive the underlying stock, they may incur losses or miss out on potential gains. Second, if the option seller can’t deliver the underlying stock, they may face penalties. Because last Thursday of the current month expiry fresh positions will be blocked.

   Also, in terms of STT on exercised contracts will be charged at a rate of 0.125% of the intrinsic value (how much the option is in the money) rather than the total contract value. For more information Click here.

2. Out of the money (OTM) option contracts do not have any intrinsic value, meaning that they expire worthless at the end of the contract period. This means that the buyer of the option would lose their entire premium payment, and for those who have shorted options, STT is only paid on the sell side, and therefore there will be no STT to pay at expiry. For more information Click here.