Hello zerodha team , just i calculated how much margin needed to take a trade , say im taking a stock future long and buying one put and selling one call , it shows total margin required with margin benefit , is that total margin amt ( span + exposure - spread benifit ) is included that put buying amount or put buying amt is seperate to add with that total margin amt to get exact full amt neede to take that trade ? Thanks.
Let’s split up the trades with an example.
- You buy Canbk Sep future at 333. This requires a margin of Rs.1.3 lacs.
- You sell 1 lot of Canbk 340 Call at 8.75. Lot size is 3084, you receive a premium of Rs.26,985 and you pay a margin of 1.07 lacs.
Now, let’s consider the margin for both the positions together, fut buy and call sell.
You receive a margin benefit of Rs.78k for this hedged position plus you receive a premium of Rs.26,985 for selling the call. But please note that buying Canbk Sep future requires 1.3lacs margin amount and selling Canbk 340 Call requires 1.07 lacs margin. The entire margin of 1.3lacs+1.07lacs = 2.37lacs has to be present in your account while taking the positions. Once both the positions are taken, 78k margin benefit will be released back into your account and only 1.58lacs margin will be blocked.
- You add a put option buy position to the above 2 positions. You buy Canbk 320 Put at Rs.3.95. This costs a premium of Rs.12182. This is already factored into the premium receivable which means that now your received premium is only Rs.14,803(as a premium amount of Rs.12,182 was paid up for buying the put from the premium received from selling the call).
Here, you see that you receive an additional span benefit which now increases your margin benefit to 90k. Span is calculated on the entire portfolio of positions and the benefits are calculated by the span system only after the positions are taken. Before the positions are taken, you require the entire margin to enter these positions.
Ok sir thanks a lot for your detailed reply , Yes i want to know whether put premium would be deducted in that margin benefit , you hae explained that thats is seperate to pay for buying ,ok once again thanks sir .