Can you do a covered call (owning a share and then selling a call of the same share) without putting up margin for the short position?
Not possible, but you can pledge it and get 50% margin from collateral and other 50% as cash.
ya, thanks
If I have lot size number of shares in my demat account and the stock is in compulsory physcial delivery, if I do covered call by selling OTM option, do I need to have up to 80% of contract value as margin one day before expiry?
As this is a covered call and there is no risk for broker, it doesn’t make sense to ask for extra margin.
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As of now margin is charged, going further we will look into this.
Siva, Do i need still maintain 80% of the contract value as cash in addition to shares in the demat for Covered call ?
Instead, can zerodha block my demat shares as per my position on the day i entered the position , so that i dont need to worry about the cash business ?
Yes, one need to maintain margin. Not possible as of now, also you can pledge those if you want margins, 50% from that and 50% cash is required.
Hello Siva,
With the new margin rules. Has there been any update in the margin requirements for selling a covered call?
One can’t do covered call by just having securities in demat, you have to pledge them to get margins and maintain 50% in cash.
Do i need to unpledge the shares if i my covered call position get exercised on the day of expiry?