Using Option Premium Proceeds for Same-Day Trades

When you exit long (buy) option positions or enter new write (short) options, the proceeds or credit from the option premium can only be used for new long (buy) option trades within the same segment on the same trading day. This means that proceeds from equity options cannot be used for trades in any other segment or vice versa on the same day.

Key Point: You can use these proceeds or option credit for all other types of trades only starting from the next trading day.

Example:

• Suppose you sell options and receive a premium of ₹1 lakh.
• Derivative trades are settled on a T+1 basis, meaning the payout from the exchange for your options premium occurs on T+1 day.
• If you were allowed to use this premium for positions in another segment on the same day (T day), it would result in a margin shortfall when reporting to the exchange, as the premium received is not yet realized.
• This shortfall would lead to a margin penalty being charged to your account by the regulator.
• To prevent this penalty, the use of the premium received is restricted to trades within the same segment on T day.