Do we get margin in case I establised a cash and future arbitrage strategy

F&O
1

Suppose 1 established a cash future arbitrage strategy by buying stock and selling future contact with 5 lakhs.

Since this is Zero Risk strategy, will I get margin to do

  1. equity delivery trading
  2. Future and options delivery trading

if Yes, How much amount and is there any cost involved on this margin?

2

No margin benefit.

  1. You pay upfront for equity.
  2. You need to have 100% margins for NRML positions.

But what you can do is pledge the stock and use the margin. Maybe @Srinivas can confirm.

3

Margin received from pledged stock can only be used for futures trading, option writing and equity intraday margin trades. If you want to buy equity for holding, then this is a cash trade and the entire cash requires to be there in the trading account.

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4

Ya, that’s what I meant. You buy the stock, pledge it and use it to buy the futures.:slight_smile:️

Thanks for the clarification.

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5

Can I Buy This Futures in NRML or Intraday?

6

Read complete details Online pledging of stocks for trading F&O here.

7

Let me answer to Myself.

You will be able to use this entire margin after haircut for taking intraday or overnight positions in Futures, and for writing Options of equities, indices, and currencies. You will not be able to use this margin to buy Options or take further positions on the equity segment.

Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin.

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