I need to buy hedge positions first to get the margin benefit of selling. But OTM buying is restricted by Zerodha. So, I should either sacrifise the margin benefit or sacrifise the profits (very close hedge) or take a very risky trade (very close selling).
I am sorry but this is not going down well with myself or with the trading community I am a part of.
As far as I know, the issue has gone from bad to worse.
Yeah, the increased margin from June 1 and the OI restriction combo has become deadly. If you have hedged positions and utilizing the avl margin to 90% level you will have to buy and sell 1 or max 2 lots at a time. I trade with 10-20 lots keeping just 5-10% additional margin for MTM losses. I was punching orders like mad today. In the end was not able to create the required sets as per my setup. Come Sep, you will no longer be able to trade if you are doing hedged positions. I am actively discussing with Zerodha to fix the OI restriction, as the time is running out fast.
Already opened a backup trading account with another broker if the OI issues are not sorted out at Zerodha.
Exactly same issues, which alternative broker u r trying dude?
problem is with not giving margin based on risk this exposure margin sytem is shit asking 40k for 4k where on world is this reasonable or valid
bring PDT rules like usa n minumum 1.5lks for trading in option but no 1 hears us
we cant trade in usa also due to shitty RBI policy we are trapped shitty retail consumers no one hears us
Opened with Fyers. Evaluating the platform. Will still like to continue with Zerodha if they fix the OI issue by providing some workaround without increasing the orders required to execute or squaring off the existing positions.
Correct, the risk mechanism of the NSE/SEBI is flawed.
@siva @nithin as mentioned earlier, need some changes in the Zerodha OI restrictions to buy options at least on weekly/monthly day. I had suggested two changes. Kindly request you to do any one of the change.
Kindly request you to implement either of the above before this Thursday expiry, else it will be nightmare for most of the traders who utilize margin with hedge trading.
@nithin Why canât we modify Zerodhaâs basket order which already takes care of margin problem and which also takes care of the OI restrictions by Selling First and Buying Next?
As shown in attached screenshot, margin calculator only considers monthly expiryâŚ
What if I want to know margin requirement for weekly expiry ???
Margins for the weekly and monthly contracts are the same, refer to the monthly contract margin requirements.
Discussee here.
Hello,
There will be lot of slippage in prices if we execute orders for option strategies in such a way where we have to first enter the buy positions and then we have to enter the sell positions.
Is there a way to place a basket order or any other work around to avoid slippages due to the time lag in executing the orders?
Thanks
Sukesh
Why doesnt Zerodha block only enough margin to cover for max M2M loss during expiry ?
If I have a hedge with NIFTY ATM CALL (SHORT) and say NIFTY ATM+50 CALL (Long) then my maximum potential loss on expiry will be = INR 50*(50 - Credit spread) .
If I Look at the spread right now for 03rd Feb 2022 expiry, this works out = (50- 17100 CE - 17150 CE) * 50 = (50-34)*50= INR 800 bucks !!!
So why not block say only INR 1000 since my max expiry loss is just INR 800 ? in case I try to square off my Long option (or short option) , you can disallow that citing insufficient margin OR automatically block margin if funds are available ?
This can be a huge relief to retail traders and doesnât increase risk to you ?
All margin requirements are determined by the exchanges and clearing corporations. Nothing is really in the hands of the broker. Btw, the reason extra margin is blocked even when the max loss is limited on an option strategy is execution and liquidity risk. You could potentially exit one leg or one leg could illiquid.
Can brokers make a request to exchanges to follow the margin system in developed countries (US, Europe etc) where maximum loss (plus some additional margin) is the amount blocked in case of debit and credit spreads?
This will increase a lot of liquidity in most strikes and generate lot more revenue for brokers, Govt, exchanges. Risks are also mitigated for traders and returns will also be greater in case of profits.
The margin requirements are determined by SEBI, exchanges just follow them. Check this post
Thanks for your response. If SEBI determines margin requirements, can brokers put forward a proposal to it highlighting the benefits and disadvantages of margin system that is used in US, Europe etc. ?
Has been done multiple times by the broking community.
Hi Nithin,
While the new framework comes with benefits, one sore point is how unpredictable the margin requirements becomes when the Index makes sharp moves (say 3 -5%)
ExampleâŚ
Dear Santhosh_Shankar,
If you are talking about real-time SPAN (i.e., capturing every price movement in a day) and update the margin accordingly is something bit difficult to do considering the current risk parameters provided by the exchange but predicting the what SPAN will change to because of the % change in the scrip/contract and update before exchange intraday SPAN is on our list of things to do.
Intraday SPAN change is considered in Basket.
There are intervals at which exchange provides the Intraday SPAN file: BOD (Beginning of the day), 11am, 12:30pm, 2pm, 3:30pm and EOD(End of the day).
More details on SPAN: https://www.nseindia.com/products-services/equity-derivatives-nse-clearing-span
