Can I use pledged margin to buy shares in equity market ?
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The margin you receive from pledging securities cannot be used to purchase shares or take long position in Options, you can use it only for Intraday Equity (MIS, CO), Trading Futures and Shorting Options.
For purchasing stocks for delivery and long Option position you will need cash balance.
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@ShubhS9 Can I take long position in equity (cnc) or buy options with premium received through selling options ?
The premium received from selling options can only be used to take Long Option position in same segment on same day (ie. proceeds from equity options can’t be used for currency or vice versa). Once this amount is settled on T+1 day you can use it for all other trades, even to purchase stocks.
No you can’t do that as pledged margin is a margin which is given to any trader by pledging an equal number of shares or securities to the broker for trading in stock exchange. If you want to trade intraday you can easily do that but there is no such option that you can hold the stock in delivery or go long in options by taking pledged margin. If you want to hold a stock in delivery then you have to buy that using cash balance.
Can I withdraw that margin to my bank account ?
No, you cannot do this. The purpose of the collateral margin you receive from pledging securities is to fund margin requirement for Derivative trades.
Thankyou
@ShubhS9 I have 5 quantity of Sovereign Gold Bonds . When pledged gives approx RS.20,000 . I check under list of securities SGBs come under cash component . Since it comes under cash component can I use that margin to buy options (long) ? Or is collateral margin used only for shorting options or trading futures irresepective of cash and non cash component ?
Irrespective of it being a Cash Component, you cannot use the collateral margin received to take Long Option positions, you can use it only for Trading Futures and Shorting Options.