What will happen to my Nifty option positions expiring Sep 2021 onwards when lot size changes from 75 to 50 from 25th June 2021?
All long-term Nifty contracts with a lot size of 75 will be reduced to 50 with effect from 25th June 2021. You can only square off your positions in multiples of 50 from 25th June. Any remaining position in the contract will be considered odd lots (not in multiples of the valid lot size). You will not be able to exit these odd lot positions, and these will be settled by the exchange at expiry.
NSE announced in March 2021 that the lot size of Nifty contracts will reduce from 75 to 50. And for all long-dated options they said:
The lot size of all existing NIFTY long term options contracts (having expiry greater than 3 months) shall be revised from 75 to 50 after the expiry of June 2021 contracts (i.e. June 24, 2021).
So what this means is that:
If you currently hold say 1 lot or 75 Qty of Nifty Sep 2021 Calls, from 25th June 2021, if you sell this 1 lot, only 50 quantities (new lot size) will get sold. The remaining 25 will be an odd lot that you will be forced to hold till expiry.
You have two options:
- Exit all your Nifty options positions with the expiry of Sept 2021 and onwards before the end of the day on 24th June.
- If you don’t want to exit, either add or subtract to your existing position to be in multiples of 50 (new lot size). But since you can add or subtract in multiples of 75 (the current lot size), you will have to convert your existing position to 150, 300, 450, 600, 750, 900, 1050, and so on.
If you end up holding option quantities like 75, 225, 375, 525, and so on by end of the day on 24th June, you will end up having an odd lot which you will not be able to exit.