Even if I hedge nifty future long with long put I need to pay M2M loss day by day?
#zerodha #trading
Yes, even if your Futures position is hedged, as Futures are marked-to-market any profit or loss you will be making will be settled on same day.
So if I get any loss I need to pay that amount
This will be debited from cash available in your account, if you do not have sufficient funds then you will have to add funds.
What about options? Loss making positions do not require daily settlement right unlike future?
Profit and Loss isn’t settled on daily basis, but if your Short Option position is making losses, margin requirement to hold the position starts going up, so you will have to maintain adequate margins to hold the position and avoid margin shortfall penalty and square-off.
@ShubhS9
And what if sold index option position has become deep itm after initiating the position, but we have also bought an option as hedge, in that case also will margin be increased ?
e.g. 14400 PE sold and 14000 PE bought as hedge. For this Initial Margin requirement is around 45k.
Now if nifty crashed to 13000, will the margin requirement go up or will it remain the same ?