How is total margin for option sell determined?

Hi @Streak

I was checking the rules for option sale margin calculations available on NSE website here

I see that there is a SPAN margin the broker calculates along with EXPOSURE margin which is 3.5% of LTP*LOT

The third component is the option premium you receive on sale.

So total margin should ideally be SPAN+EXPOSURE - PREMIUM.

However Zerodha blocks SPAN+EXPOSURE **+**PREMIUM. Why is that ? Is this by rule or internal RMS policy of Zerodha ?

Also, I am looking to see if there is a place someone can download margins for all instruments. Is anyone aware of any URL which provides it in excel?

Hi @Lotusdew

Please note that Streak is pre-integrated with the broker(here Zerodha), so all orders are processed via the broker. Hence Streak does not calculate the margin and whatever margin is required by the broker (when you place it directly from the broker terminal) the same is applicable when placing via Streak.

For detailed assistance with your query, I will recommend reaching out to Zerodha. @ShubhS9 can you please look into this?

We only block SPAN + Exposure margin for F&O positions. The premium you receive from selling options is credited to your account. This can be used for buying options on T-Day and for all other purposes from T+1 day.

NSE provides SPAN files on its website, however, it is not in Excel. You can download it here. You can also check the margin requirement here.

@ShubhS9 : Thanks for the explanation . However, when I check for margin calculated as per your link, the total margin does not give the benefit of the premium collected.

The SPAN is inflated by SPAN (as per NSE) + Premium. Then you reduce the value by premium - essentially not giving the benifit of Premium.

When I check another broker the SPAN does not match with yours (and theirs is correct)

The SPAN is identical for all brokers. Can you please help me understand the difference ?

@ShubhS9 : Can you please share your thoughts ?

Hi @Lotusdew

We show Premium receivable as separate field on our website margin calcy and not reduced from the total margin because it shows based on worst case scenario where order can be opened but not executed or partial execution. You can refer to Basket where we show both required margin (Required margin before the execution) and final margin ((debiting the premium receivable). Also you can tick on considering existing position to know the final margin after the hedge/spread benefit if any on entire portfolio.

Risk arrays are same for all brokers since its given in SPAN file provided by Clearing Corporation but there could be slight difference due to converting arrays into values through algorithm. The above difference you were observing is because we load BOD SPAN whereas we can see price displayed in other broker calcy is different and not as per BOD SPAN. Also you were comparing July contract in our calcy vs June in theirs :slight_smile:

Thanks @Ananth : Makes sense now. Also thanks for pointing out the different expiries. But I see your point. Thanks for taking time to answer.