Physical settlement applies to Stock Futures and Options (F&O) contracts that are not squared off before expiry. Here’s how it works at Lakshmishree:
 

For Equity Derivatives:

• On expiry day, intraday and carry-forward trading in stock futures are allowed, subject to sufficient margin fulfillment.
   
• If you have an open carry-forward position in a stock futures or options contract, you must maintain 100% of the contract value as margin before 10:00 AM on expiry day (Thursday) to take or give physical delivery.
   
• If margin is insufficient, Lakshmishree may square off the position. If square-off is not possible (due to liquidity issues, ITM options, etc.), physical settlement costs will apply.
   

For Commodities:

• No physical delivery is allowed – all deliverable commodity contracts are closed one day before the ‘Tender Period’ set by the exchange.
   
• Commodity options with devolvement into futures will be blocked for fresh trading on expiry day.
   
• If margin is insufficient for settlement, all open positions will be squared off before expiry.
   

Traders should Close Their Positions Before Expiry to avoid the complexities of physical settlement.