I basically buy BankNifty CE and PE for intra day trading. Do I need margins as well as per new margin changes? Please confirm.
No. Buying Options does not require margins, you only have to pay amount equal to Premium * Lot Size upfront.
One question, if one moves to hedged positions to get benefits under new margin rules to keep margins low, will Zerodha allow buying all index options or there will still be restrictions and one has to find broker that does allow buying of options without restrictions.
Asking because if playing straddle, the needed hedges will be far apart as premium collected will be much more especially in Banknifty.
One Bnf straddle will easily fetch 1000 points on Friday and in Zerodha, buying options 1000 points away from spot either side, generally is not possible because of restrictions.
1 Like
If you have already taken Short position, to hedge your position you can buy Options outside allowed range to the extent of quantity you have shorted.
Hello @ShubhS9 Just need a clarification as there is a discussion going on twitter regarding other brokers.
Suppose I take a position in futures in intraday with a capital of 5 lacs and square it off within an hour.
Will I be able to take another position with that 5 lacs again after squaring off the previous trade or else will the margin be blocked for whole day not allowing to take another trade with that 5 lacs?
1 Like
Ok
What happens under following scenario
I have 175000 in account and I open short straddle (collecting 818 points) at 29600 (current bnf value), as per margin calculator, 170000 + some change will be blocked.
Now, I buy 28800 PE and 30400 CE as hedges. Hedges are this far as I already collect around 800 points in straddle.
Range allowed by Zerodha for buying for the week is 29200 to 30000 PE/CE.
Now, as per margin calculator, my margin requirement for trade falls to around 50K.
Now, since I still have 120000 spare capital after satisfying the margin requirement, will system allow another iron fly with 50k already blocked and hedges under restriction?
Ideally, it should, right?
What should be done to utilise full capital?
When you square-off your position, margins are released back in your account, you can use those for taking another trades.
You can take another position with remaining margin, however to purchase Options outside allowed range you will need to first execute Short position, then only you can buy Option outside allowed range.
We need Margin only on 1 lot. If anyone try to sell more than 1 lot Then sebi can to take margin as per new rules or requirement. Please talk to SEBI on behalf of retail traders. Thank you:pray:
. What you think about this. @retailtraders @nithin
1 Like
@priyank:- Your argument is not correct. You said trading does not contribute anything and so government is not interested. Then why does the govt. encourage sportsmen. Sports is also a zero-sum game. Sports is not useful to anyone and the economy (there is lot of black money in it, in some cases). The only good thing about sports is that it may make you better fit physically. But that kind of benefit is there with trading also. You develop so many qualities that only traders have. It is learnt over years of practice and dedication and discipline. This is not gambling. Even a successful CEO of a company will fail miserably if he is asked to do trading.
2 Likes
@anupam:- Your point is very valid. I have always thought that LOT SIZE should be brought down for Nifty , bank nifty and stocks also, so that small traders will be able to do hedging of their small positions. I would suggest bringing down the lot size to at least 1/4th of what it is now. This will protect small traders in a big way. Will Nithin suggest this to SEBI on priority.?
2 Likes
@nithin:- I hear that SEBI is doing what is good for small traders. If this is true, then they should immediately reduce the LOT SIZE of all futures & options contracts. For Nifty it is now 75. It should be brought down to 15 and for Banknifty it should be like 4 or 5. This way small traders can hedge their positions in stocks or futures using these contracts; they will be able to participate in F&O effectively. At present we have knowledge but not enough capital to participate effectively. This reduction will protect small traders in a big way. Will you please suggest this to SEBI on priority.?
1 Like
I both agree and disagree with SEBI. The ultimate goal should be removal of Margin money totally. Who pays for the interest on the margin money when a trader takes a position on a derivative contract 3 months in advance? Allowing margin money is risk in itself. Let so called big player with big money pay in full … why do they need margin money? Or is it market structure skewed by SEBI to favour big players only? Driving away retailer from derivative segments will prevent them from hedging their positions. And big players will thus be able to manipulate market and suck the blood out from retailers. Thats what happened in 2008. It is going to happen again in future. SEBI is just ensuring that. Let it be level playing field. But SEBI wont do it. Because Govt mop up big tax revenues from huge volumes of FII and big players.
So the only group that won’t be affected by this change is option buyers. Many retail traders will have to switch to option buying to make any serious profit from day trading. I think, as a result of all this, people will end up losing more money than before due to option buying.
2 Likes
Very good point. For another e.g., Indusind Bank, lot size is 800. Wow!!!
Hi… I have 2 doubts.
- This rule is only for FNO stocks ? or for all stocks… ? For Ex: IRCTC is a non FNO stock and has 11x. it will reduce to 5x.?
- This rule is also for MCX ?
please anyone clarify
For all stocks, margin requirements will go up in phased manner starting December 1st and from September 2021 maximum leverage which can be will be 5x.
Yes, new rules apply for all F&O (Equity, Currency, Commodity).
I have a doubt on Future LONG positions. If I have LONG positions bought last week, will the account start showing “insufficient fund in the account” from tomorrow?