Is margin benefits for crude options available on zerodha ? Not reflecting for me.
Yes, it is available, varying based on the strikes and associated risk factors. You can check the Margin benefits provided by the exchange in our Margin Calculator.
Generally for Commodity options the benefits will be very less compared to Equity options.
Since most commodity contracts have much higher (Span + intra-commodity charges) or (short option minimum charge), there is very little hedge benefit that you get.
This holds good for inter-commodity contracts as well.
There is not much hedge benefit from the MCX exchange end itself.
Providing here SPAN Margin computation methodology
The total margin requirements for a member for a portfolio of futures and options
contract would be computed as follows:
i. SPAN will add up the Scanning Risk Charges and the intra-commodity Spread Charges.
ii. SPAN will compare this figure (as per i above) to the Short Option Minimum charge
iii. It will select the larger of the two values between (i) and (ii)
iv. Total SPAN Margin requirement is equal to SPAN Risk Requirement (as per
iii above), less the ‘net option value’, which is mark to market value of the difference in long option positions and short options positions.
v. Initial Margin requirement = Total SPAN Margin Requirement + Net Buy Premium
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