i have taken the following trade today
now that it expires next week, i plan to hold it till the expiry day and square off on the expiry day. how much margin would i need to have. to continue it till the expiry day for the strategy as a whole
@siva @ShubhS9 @Prayag
Have answered a similar query, do check this out:
Margin for Short Option position will increase only on expiry day to 40% of the contract value or SPAN + Exposure margin (whichever is higher).
If you’re holding Long Options, then the margin requirment will depend on whether the Option is OTM or ITM.
For Long OTM Options there isn’t any additional margin requirement. However, for Long ITM Options, exchange blocks physical delivery margin from expiry minus 4 days. This
support article explains it in detail.
Hey, thanks for the reply. i have gone through them.
my confusion is because i have net zero quantity. will i still have exponential increase in margin required than what is blocked today?
@ShubhS9 I had posted a similar question earlier. I understand that a Naked short option will have an increased margin requirement. The confusion is when the positions are hedged.
Given the case,
Will there be an increase in margin requirement in the last week of expiry?
If the option becomes ITM, since it’s hedged on both sides, this will be considered as a “net-off” and would’nt require physical delivery?
If the additional margins are not brought in, will there be a peak margin penalty or will there be a margin shortfall ( interest payable to zerodha)?
Yes, even if your position is hedged, margin requirements will increase. Have explained a scenario in this post:
Last week Margin requirement for Hedged Position(Iron Condour) - #2 by ShubhS9