If a cover order has been placed, do I need additional margin requirement for placing a sell order as well?

General
1

When I place a cover order, a stop loss order is also sent to the market. Now, if I want to set a target order, do I need additional margin requirements. For example, if I buy Reliance Futures @ 1200; with SL of 1150; then while placing a sell target of 1250 do I need additional margin requirements (the same as I’m shorting a future)

2

Hi Abdul,

As you know a cover order doesn’t allow you to place a Target order. If you buy using CO, a stop loss order is sent to the Exchange. The product code under which the stop loss order is sent is “CO” product.
If you place a separate sell order, you’d have to place it either in product code “MIS” or “NRML”. Since the target is a different product altogether, additional margins would be required.

To overcome this, you can use the Bracket order facility which will allow you to place a target order and a stop loss order without levying any additional margins.

3 Likes
3

In cover orders you dont need additional margin, margin initially blocked is sufficient for your sale order order also. But do not place any separate order to close your cover order purchase. If you do that it may ask for additional margin, considering this as a new Entry Trade and it will consider as shorting under intraday.

With cover orders you cannot set a Target price, you need to manually Exit Cover Order when your target reaches. If you place a Sell Order additionally (in addition to the already appearing Buy Order which is complete and Sell order which is Stop Loss), It will be considered as if you are placing a separate sell order to do short selling (sell first and buy later).

The only way to sell your shares, is to use Exit Cover Order or modify the stop loss value to the current market price. Then automatically your shares under cover order will be sold.

You can see the sale price in your Stop Loss order, it will show complete and give you the average price.

In case if you want to set Traget and SL in a single order, try Bracket orders. But bracket orders work only when you are logged in.

Cover order’s stop loss works even if you have logged off the system and gone somewhere.

All Cover Orders and Bracket Orders will be squared off at 3:20 pm, please remember that.