Hello All,
I wanted to know how zerodha determines the margin requirement for options writing
and what will happen when the margin requirements was low and I bought contracts in bulk and later the margin requirement got increased, will my positions will be liquidated even though I am not in loss in options writing but premium is increasing.
The margin requirements are prescribed by the exchange, they share the margin requirement files with members, and the margins are collected according to this.
You can read this post to get an idea of how margins are calculated.
You have to maintain adequate margins to hold your position. When your margin utilization increases RMS team will send you a margin call to add funds, if you do not add funds and maintain the required margin your position will be squared-off, sometimes due to high volatility or low liquidity RMS too might not be able to square-off your position, so it is best to monitor your position and maintain sufficient margins.
Also, if there is a shortfall in margin, exchange charges margin shortfall penalty, you can learn more on this here.