How much money needed to short OPTIONS


#1

Not MIS but as normal - how much needed to be in the account to short a NIFTY call/put at 100, same is about BankNifty

I see even double of 4000, (40 x 100) is not enough for shorting. How do you quickly calculate the cash required for shorts…


#2

The rule of thumb is that the margin required for shorting an option is more or less equal to the margin required to trade the future of the same underlying.

More In The Money the option is, more is the margin required for shorting it. Ex, shorting Nifty 10300 Call requires a higher margin than shorting 10700 Call.

Use the SPAN Calculator to calculate margin requirements.


#3

Thank you so much. it seems better to short futures ? and buy call options ?


#4

Margin wise, yes. Strategy wise, you’ll have to take a call.


#5

If you are confident about the direction of stock, go for call option buy because it has limited risk, which is what the premium u paid


#6

Yes, so far I have been only buying call/put. However…it seems calls are more quickly affected when the market goes down… compared to the puts when it is uptrend…


#7

it is equal to the amount you need to short a future contact.


#8

Does premium value has no role in shorting option…??

Like in near to expiry premium would be 20 for some out of money call of banknifty…
Won’t I get in 800/- rs 1 lot…

Pl. Clarify …


#9

brother, option premium has everything
when you sell as @ 100, you buy back above 100 to make profit

in the money premium is always greater as that has very less chances to be 0 at expiry, but out of the money premium is greater because of risk containing of loosing all capital at expiry
if still any query please explain clear


#10

Thank you…


#11

Does anyone knows, why margin requirement of selling the Stock Option is less than selling Nifty/Banknifty Options even if the stock option lot size is more than index options?


#12

It depends on the underlying asset, to which stock option selling you have compared with. For Bajaj Finance 1 lot selling requires 1 Lakh


#13

Thanks for the reply.

So how the margin is calculated? Is it depends on Stock Beta?


#14

@siva Can you please let me know the reason?


#15

Nothing to do with lot size, check the contract size, lot size * price and volatility in it.