Margin is always percent of contract value.
Change is on margin required, if 1 lakh is required now after new span update it will be 105000, so 5% change in margin required.
Hi Guys, I had similar doubts but sadly even after reading through all this I am not sure how this will actually work in real time.
This aside, there have been so many of my own issues answers to which is very tricky to find apart from trying things out in real market. There are so many such doubts which have been discussed in numerous of such tradingqna threads over so many years. I suggest why don’t you guys make detailed blog posts on each of such processes and doubts so that newbie investors get the hang of everything in a comprehensive manner and don’t burn money while learning these things? I know Varsity is there but this is something different we are talking about in these threads, the exact answers to whom no Varsity, no video or no content on the internet contains. @siva @nithin @ShubhS9
I believe this can also be a good source of traffic - so much content throwing so many users which might convert to be Zerodha users. Request you to give it a thought.
Hey, we have detailed posts in Tradingqna, Zconnect and support portal. You just have to search with the right query.
Btw what was your query on margins?
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While peakut shares his query, I’ll take this opportunity and slip in mine (on a slightly different tangent), since you are answering.
To set the context, I’ll start with the below 2 rules from Larry Hite:
- If you don’t bet, you can’t win.
- If you lose all your chips, you can’t bet.
I’m a very conservative trader trying to make 8-10% annual returns from index options selling, using long term naked puts (1-3 yrs away, cash secured) & short term deep OTM naked calls (1-2 days to expiry).
Now coming to my query. Suppose there’s a flash crash, with nifty falling 10% (or worse) in minutes and it recovers completely within an hour. Now, during that 1 hour, I’ll get margin calls for my mtm losses in the long term puts. My past experience has been that during high volatility, there’s very little time to react to those margin calls (have had my positions auto-squared off within minutes). My worry is that what if I fail to add the required margins before the RM team squares off my positions only for nifty to recover back completely (and not allowing me time to buy the underlying)? Will my cash secured puts simply become naked puts?
Is there a way I can get into an agreement with zerodha to have them never square off my NRML positions and I pay short margin penalties (till my pledged holdings are sufficient to cover for any default from my end).
Feels like I’m working with loose ends and not prepared enough to ensure I stay true to rule 2 from above.
I have worked in the collateral/margin management department with various I banks.
I agree with @siva
Margins get recalculated based on changes in IV and sometimes because of impending HV.
So, if you have a margin call at 10.30 am and you do not honour it… nothing happens… except that your positions will be monitored for possible square off, because of leverage factor.
The problem with Zerodha and India brokers is that the rules change arbitrarily and it cannot be explained even with excel.
In normal markets, this is never an issue. But you are right; on days when markets fall, say, upwards of 5%, your margin requirement for a short option may go up, leading to our risk management team squaring positions. As per new regulations, we can’t pass an upfront margin penalty to the customer, so that would mean that we can’t get into any arrangement to allow this position even if you are ready to pay the margin penalty.
The only way to cover this risk is to never trade with the entire capital. Always keep sufficient free funds to cover the worst-case scenario. By the way, being conservative in the long run will also help increase the odds of winning when trading.
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Got it, thanks. It’s just that preparing for the worst case kills all the returns. Guess that’s the nature of the game.
If SEBI’s objective is to safeguard investor’s interests, Do you think a regulation around auto-square off might also be around the corner (like minimum reaction time/ no square-offs before 3:20/ lot size determination ) - considering it’s completely arbitrary and brokers have vested interest here with all the related charges. (Just wondering, not sure if this can be called a regulatory foresight though :).
The regulator would want squareoffs to be done as soon as possible; they would wish for markets to be safer than less safe. 
I think if brokers today give time till 3.20, it is more to allow customers to transfer additional funds. Otherwise, if you think about it, why even give time till 3.20 pm if the incentive is to generate brokerage?
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Got it, thanks for answering to the queries.
Sorry this thread was missed. What I meant here was Varsity is a bit theoretical, while Tradingqna is like a pile of bodies where one has to do a lot of effort, filter out all the rant, endure all divergences from the topic, that too only if one manages to find the right thread, to get exactly what one wants.
I am talking about a product which contains a gist of Tradingqna threads, not threadwise but topicwise.
Let’s say one topic can be ‘Order Execution in Hedged Positions’. Now this topic could contain a gist / knowledge squeeze of all nuances which are associated with this topic, currently spread across numerous tradingqna threads. Hope that made sense.
Very hard to collate everything across different threads. But this search works really well plus support.zerodha.com has pretty much all things.
I just let you know my pain point and [presumably] of many of your users. Now it’s on you whether you want to solve it.
Although, it is tough to find a shortcut as there are innumerable topics with various valuable answers in different threads.
We will try and create a mega thread where we will share all the threads related to key topics.
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Starring the most important replies/answers within a thread, for each thread, can be another.
Starred responses can then be played around from backend by displaying them on top or compiling them somewhere etc.
Meher, maybe it can be a pinned post. Link to the most important conversation types.
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Yes, Boss. Will do it.
The margin for FNO is updated periodically by the stock exchange based on various factors such as market volatility, liquidity, and risk. The changes are communicated to traders through circulars or notifications issued by the exchange. Traders should stay informed about the latest margin requirements to avoid margin calls and potential liquidation of their positions.
There seems to be an error in exposure margin for Nifty 17000 PE which is causing the margin required for writing 17000 PE to be higher than 17500 PE
The actual value probably should be 18,458, incorrectly shown as 28,458? Is this error from Zerodha or from the exchange itself?
Hi @Roy
As per rules stipulated by the exchange, An extra 3% extreme loss margin is applied for those deep OTM contracts which are more than 10% away from the previous day closing price of the underlying.
Hence, Selling 17000 PE would require higher margin than say, 17500 PE which is still within 10% from previous day’s close.
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