Could anyone brief me on how pledging shares works?

Here is a scenario where I had collateral amount of 70000 INR and wanted to write options of worth 140000 INR…

Could I write options by using 70k from cash and 70k from collateral (which is 50% of option value) ?

In the above case are there any possibilities of me getting charged with interest?

Whenever you write options, margins get blocked. You can keep margins in your trading account either in the form of Cash or collateral or a mix of both Cash and Collateral.

When your broker blocks margins for the positions you take, the brokers margins are in turn blocked by the Exchanges for such positions. When the Exchanges block margins, the maximum collateral that they’ll consider from the broker is 50% of the total margins and insist on the other 50% being deposited by way of cash.

If you maintain the cash-collateral component in the ratio of 50:50, then you don’t get any interest charged. If you’re short on the cash component, the broker’s own funds get deployed towards margin at the Exchange for which you’ve to pay interest.

In your example above, if, for the position worth 140000, you have cash of Rs.70,000 and collateral of Rs.70,000 then no interest gets levied.

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