How do option selling margin change in a losing position?

F&O
1

If the margin when placing a trade is say Rs 50,000 (Writing options) and if the market goes against the trade, how does the margin requirement change ? Am I supposed to add more funds into the account?

Also how does the “unlimited risk” of option selling plays out? What if due to some reason the position is not squared off automatically, am I liable to pay more than what I have out forward as margin?

Please guide

2

Yes, whatever MTM losses are shown. You will need have that amount as margin (cash).

If you don’t,then you will get margin over utilized email and sms from the broker (Zerodha) and proceed to square off your position if no action is taken by you.

1 Like
3

Thanks for the reply!
Isn’t MTM calculated for futures contract?