Change in Margin for active trade

F&O
1

I have a confusion on margin if i hedge it only for over night position.

Example : I am long on nifty @ 10000 by 3:15 pm it is trading at 10200, now if i buy a 10100 put to hedge it, due i need to maintain full margin or less margin as per new rule.

Thanks for your help in advance.

2

Of course the overnight margin requirement will be lower. But will it help you take more positions may be not because markets are closed anyway. It may only help next day when market opens.

Therefore in this case, what you are actually trying to do is to manage your overnight risk by buying an insurance i.e. puts.

3

buying of call or puts doesn’t need margins, for buying options we need premium which we need to pay in full.

4

My nifty Future margin will be 25K after hedging or i have to maintain 125K?

5

I m not sure about exact margin after the hedge… but definitely not 125K original margin that you need to enter a long future. I think zerodha margin calculator can help with this

But my point is why do you need to worry about the having small margin for overnight position. U r not going to use that amount any way till market re-opens

6

You are protecting your Futures position with 10000 PUT which will work as hedge so you won’t require full margin, your margin requirement will be about 23k.

7

Thanks

8

It is basically changing an intraday trade to swing, due to expected Gap up or Gap Down. MIS to CNC with Hedge to reduce the margins.

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