NSE announces reintroduction of Do Not Exercise instruction for stock options

FPJ Web DeskUpdated: Tuesday, April 12, 2022, 10:20 AM IST
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The move will help brokers and traders. / Representative image |

The National Stock Exchange will reintroduce the ‘Do not exercise’ (DNE) instruction in stock options from April 28. The move will help brokers and traders.

According to a NSE clearing circular on April 11, “It may be noted that facility to specify ‘Do Not Exercise’ instruction on expiry day will be re-introduced in the Stock Option contracts with effect from April 28”.

DNE will be allowed up to 3 strike prices of the stock option.

The system, which was introduced in 2017, is a fail-safe for options traders during the time of cash-settlement of options contracts.

What is an option?

An Option is a contract that gives a trader the right but not the obligation to buy or sell a share at a particular date at a specified price. In the Call option, the trader gets the right but not the obligation to buy the stock at a specified date and price.

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