How is margin calculated for short selling a Nifty Jan 8700 CE?

The same way that they are calculated for short selling a Nifty Jan 8800 CE

Margins are calculated using SPAN (Standard portfolio analysis of risks), this is a model built by CME (Chicago mercantile exchange) and used by NSE. 

You can use  our SPAN calculator to know how much is charged. 

Margins are charged for option writing because potential losses are unlimited. Hence a margin charged and MTM'd. 

Check this chapter on Varsity: http://zerodha.com/varsity/chapter/margin-m2m/

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