Ask Me Anything about the new margin framework for F&O: by Sensibull

@joyesh premium will come down , there is no free lunch in the world ,

see hedged position margin are came down significantly , what the risk we have , SEBI clearly reduce the risk to broker but retail people NO , see how . those who are trade with 5 lots nifty short strangle , the same amount now he can took 50 lots + if hedged , naturaly people can take more than 50 lots , any big swing in the market absolutely you will receive a margin call broker will square of the position ,

market structure will never change , here only 5 to 10% people only make money , in usa also same percentage , if you are good to managing risk you will be won

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Correct

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Interesting point, @Riyas_Ahamed

I already bought june option on buy side , for hedging if i sell an option against an option , which i bought earlier , how to or will i get reduced margin?

Thanks, this has solved major problem for us :slight_smile:

Your sell leg will required just 30k types free cash now to enter

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Thank you

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What if we sell first?
When we but the protection, will the blocked margin reduce?

In case of short strangle which order to be placed first? Selling PE or CE?

When I want to go for starngle or straddle, which leg I have to sell first(call sell or put sell)??

If you sell first you will require full margin until you hedge your position.

You can place any leg first, just keep in mind you will need full margin to execute strangle. for strangle and straddle you get margin benefit only after both legs have been executed, untill then you need to have cash for full margin in your account.

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To get margin benefit, buy order should be executed prior to sell order. Similarly while closing the position you need to close short option first before. What happens to accounts those have funds that are only sufficient for hedged position? (say <50k account size). Isn’t there a liquidation risk here? How does sensibull manage simultaneous exit of positions without market orders? Is there any feature like in interactive brokers to enter and exit spreads?

point no 6 If you buy protective hedges for futures, margins will go down nearly 80%. That is, buy a put for protecting a future buy and buy a call for protecting a future sell.

Please explain this with an example of Banknifty …Future Long and an ATM put long…or reverse way Future Short and an ATM Call long
Pls elaborate

I feel like cover orders should have lowest margin based on stop loss. Most of the strategies now require lower margin than Cover orders.

Does new margin rules also apply on USDINR?

Yes, new margins apply for Currency F&O as well.

@Sushil_Girdher

Without the protection

With protection

You can see this here
https://web.sensibull.com/option-strategy-builder

@skanukollu
You can do buy first and then sell. No risk. We have also automated the market execution to follow this