Short Position (Delivery)

#1
Hi,

2 days back, I shorted Wockhardt and instead of going for the intraday option, I selected delivery option (I use IIFL).

Now that there is a short delivery of 50 Wockhardt, what should happen now?

Can I cover this short delivery with a new buy 'delivery' order of 50 shares? Or, should I just leave it as it is and the whole thing will go for auction?

Cheers!
Gaurav
 

Alchemist

Administrator
Staff member
#2
You can't cover a delivery short position.

Leave it as it is.

The shares will be bought in the auction.

In case there is an internal shortage, the position will be closed out as per IIFL's policies.

6.
SHORTAGES IN OBLIGATIONS ARISING OUT OF INTERNAL NETTING OF TRADES

In case the client defaults on its existing obligation and in the event the trade has been internally netted off by IIFL, there could be internal shortages. The internal shortages are marked against the client randomly at the sole discretion of IIFL taking into account the delivery obligations through Exchanges. In case of failure of delivery the client marked for internal netting of trade, the same shall be met through fresh market purchases and the loss on account of the said purchases will be charged to the defaulting client's account. However, defaulting client will not be eligible for any profit of account of this.
https://ttweb.indiainfoline.com/trade/downloads/Policies_and_Procedures.pdf
 
#3
Thanks Alchemist for the quick response.

But I have another question then. If we cannot cover short sell (delivery) position, does it mean that one should not be short selling unless it is intraday? Or in other words, is shorting an intraday thing only?
 

Alchemist

Administrator
Staff member
#4
Thanks Alchemist for the quick response.

But I have another question then. If we cannot cover short sell (delivery) position, does it mean that one should not be short selling unless it is intraday? Or in other words, is shorting an intraday thing only?
I meant you can't cover the next day.

You can cover the same day irrespective of the whether you chose "intraday" or "delivery" while placing the sell order.

Only shares in "trade for trade" segment can't be covered the same day. All other shares can be covered the same day.
 
#5
I meant you can't cover the next day.

You can cover the same day irrespective of the whether you chose "intraday" or "delivery" while placing the sell order.

Only shares in "trade for trade" segment can't be covered the same day. All other shares can be covered the same day.
Thanks a ton Alchemist!

If you permit me to ask another question..

If I buy a stock (delivery), IIFL presents me an option to 'Square off' the position the very next minute. I always thought I can sell only once the shares are delivered to my account (or if its BTST).

Can you tell me what does square off means here?

Cheers!
Gaurav
 

Alchemist

Administrator
Staff member
#6
If I buy a stock (delivery), IIFL presents me an option to 'Square off' the position the very next minute. I always thought I can sell only once the shares are delivered to my account (or if its BTST).
Once you buy, you can sell any time you want.

If you sell the same day (T day), it will be considered "day trading" and you will pay lower brokerage.

If you sell the next trading day (T+1 day), then it is fine too. However, there is a risk that the seller from whom you purchased the shares will not deliver the shares and thus you also won't be able to deliver the shares on T+2 day.

Selling on T+2 day also carries the same risk because you will only know at the end of T+2 day whether you have got the shares or the delivery is short.

If you want to take this risk, you can sell on T+1 day or T+2 day. Usually the percentage of shares delivered short is very low (less than 1%). Only when shares hit an upper circuit, the short delivery percentage goes up sharply.
 

Alchemist

Administrator
Staff member
#7
"Square-off" basically means to close an open position by doing a reverse trade.

If you have purchased 10 shares of ITC, "squaring-off" will be selling the 10 shares.

If you have sold 10 shares of ITC, "squaring-off" will be buying back the 10 shares.
 
#8
Once you buy, you can sell any time you want.

If you sell the same day (T day), it will be considered "day trading" and you will pay lower brokerage.

If you sell the next trading day (T+1 day), then it is fine too. However, there is a risk that the seller from whom you purchased the shares will not deliver the shares and thus you also won't be able to deliver the shares on T+2 day.

Selling on T+2 day also carries the same risk because you will only know at the end of T+2 day whether you have got the shares or the delivery is short.

If you want to take this risk, you can sell on T+1 day or T+2 day. Usually the percentage of shares delivered short is very low (less than 1%). Only when shares hit an upper circuit, the short delivery percentage goes up sharply.
Immensely helpful! Thanks a ton.

A beginner here, hence basic questions :)

Cheers!
Gaurav
 
Top