One of the reasons you get insufficient margin rejection for a new order while you hold a long options position is because your existing long position may have transitioned into an ITM option.

As per the physical settlement policy, all ITM positions should have sufficient margins in the last week of expiry.

The Exchange charges physical delivery margins as a percentage of applicable margins ( VaR + ELM +Adhoc ) of the underlying stock, which is levied from expiry minus 4 days for long ITM options in the following manner -

The margins requirements can vary on an intraday basis as well, based on the status of the option (ITM/OTM). Here is an example -

Suppose you have bought IRCTC2700CE while the spot price of IRCTC was 2650. Consider the following price movement in the stock.

The margins won't change at 9:15 AM or at market open, since the margins are already blocked for the OTM option.

At 9:45 AM, the stock trades 2750, the option is ITM, hence an additional margin of 25% (VAR+ELM) will be blocked.

If you place a new order, the same will be rejected if you don't have sufficient margins to cover the new order.

At 10 AM, the stock drops to 2600, option turns OTM, the additional 25% margin requirement is no longer required. New orders will go through.

We request you to please check this article for more information on the physical settlement.

Note:

1. If the stock (underlying) movement is very volatile, the change in the moneyness may be quick and new orders may be rejected/accepted accordingly, for your orders to be successfully placed please ensure you maintain sufficient margin.

2. On Wednesday and Thursday of the expiry week, we block 50% of the contract value for ITM options.