Cash Collateral and M2M

  1. If i have collateral margin of say 10 lacs ( pledged liquid funds) and my margin blocked while taking the trade is say 5 lacs and the next day if there is a violent move and my margin requirement increases to 5.25 lacs, am I required to keep cash in my account? Cant this 25k increase in margin be blocked from the collateral margin? If i keep zero cash in my account will i get a margin penalty?

  2. If the trade was a simple spread where say i sold 10 lots of 13500 put @Rs100 and bought 10 lots of 13400 put as a hedge at Rs50. So max possible loss is 50x75x10 = 37500.

Now assume market fell badly and my sold put goes up to Rs180 and gives me Rs80 loss. So the loss is 80x75x10= 60,000

But bought hedge also goes up from 50 to 110 giving a profit of 60x75x10= 45000

Now my question is will zerodha count my loss as 60,000 or 15,000? and accordingly block more margin

Do check this topic, queries are similar to yours: MTM Margin calculations in options spreads

I went through that thread and it answers my question #2 and the answer is that the profit in the long positions isnt considered in calculating the margin

Could you please answer my question #1

Thanks

If the margin requirment for your position increases, it’ll be adjusted from your available margins only. You won’t have to bring additional cash.

Thank you!