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Futures & Options

Warning: December 2015 F&O Contracts Will Need To Be A Multiple Of 75, You Have Three Days To Act

Lot sizes for Futures and Options contracts starting November are increasing, and the Nifty will go to a lot size of 75.

What happens, then, if you had bought LEAPS (Long Term Options) of December 2015? These have a current lot size of 50.

September contracts expire on September 24 (Thursday). Come September 25 (which is a holiday, so it is actually Sep 28), and you will have new contracts for December 2015. (Currently today contracts are Sep, Oct and Nov. On Sep 28, the Sep contracts would have expired, so they will have the three months of Oct, Nov (both already there) and Dec)

When the December contracts come into place they will have a contract size of 75.

If you own 50 shares of Nifty (December 2015) you have three days to increase it to a contract size that is exactly divisible by 75, otherwise you won’t be able to sell your shares!

For example, if you own 100 Nifty, add another 50 to get to a size of 150 (which is divisible by 75). If you own 50, you buy another 100. Or, you just get rid of this and buy new positions next Monday.

Here’s Nithin from Zerodha on the topic:

So if you are holding 50 Nifty Dec CE/PE or any multiple of 50 (current lot size of Nifty for long dated options is 50 and not 25 like everyone thinks) after the end of this expiry on 24th Sept, the new lotsize of Dec will be 75. What this means now is that you will not be able to exit the 50 Nifty CE/PE that you hold after this thursday.

So for example
1. If you hold 50 Nifty Dec calls after this expiry. You will not be able to convert this into a multiple of 75, and hence u will not be able to sell and will be forced to hold the position till Dec expiry.
2. If you hold 100 Nifty Dec calls (2 lots) after this expiry, you will be able to sell only 1 lot of 75, and u will be forced to hold the remaining 25 till Dec expiry.

So, if you want to continue to hold this position into next month, ensure that you are holding an option position which is a multiple of 75 (new lot size). So if you have 50 Nifty, buy another 100 to make it 150 (multiple of 75). Or just square off all positions and take a fresh position after the Sep expiry.
Remember that you have to get this done before the end of September expiry on Thu, 24th Sep 2015.

A note to warn you. This will apply to March 2016 contracts (do this before December end), Jun 2016 contracts and so on. Otherwise there is no exit – just a hold till expiry.