Can someone highlight what is the pledging policy on zerodha for writing options in intraday ? Can mutual fund sip’s or fd’s considered as 50% collateral margins with remaining 50% in cash ?
You cannot pledge FD’s, for collateral. You can pledge Mutual Fund’s, this list, contains all the Mutual Fund’s which you can pledge.
The collateral margin you will receive can be used for Intraday Equity, Trading (Buying and Shorting) Futures and Shorting Options. You cannot buy stocks for delivery with this margin and neither can you buy Options, for that you will need cash.
The 50:50 Cash - Collateral requirment is for overnight positions.
Thanks for the list, how do I pledge mutual funds that I have invested in through a local agent ?
So I write options intraday, I can’t avail this collateral margin benefit ? After leverages are gone, writing options in NRML, but using collateral as 50% for intraday writing options is not possible ?
You can only pledge Mutual Fund’s which are in your Zerodha Demat account.
If these Mutual Fund’s are Direct Mutual Fund’s you can transfer them to your Zerodha Demat account, after that you can pledge if they are part of approved list of securities. You can read this to know more.
If these Mutual Fund’s you have invested in are Regular Mutual Fund’s, then you can redeem these investments and start afresh on Coin.
The 50:50 Cash - Collateral requirment for overnight positions is not benefit but restriction, for overnight positions in F&O you have to maintain minimum 50% margins in cash and remaining 50% can come from collateral margin, excess use of collateral margin for overnight positions attracts interest of 0.05% per day.
For Intraday there is no such restriction as you can utilise your full collateral margin.
So for intraday writing options, if I decide to pledge, and currently selling one nifty option on index costs 35k, with leverages gone, this will move to 1.5 lakh around, so 90% of the pledged collateral is sufficient ? I need cash only 10% or whatever margin I get from collateral after haircut ?
See, if you pledge some security and after haircut of say 10% you recieve 200,000 in collateral.
If you want to Short Nifty Option for Intraday and margin requirement is 1.5 lahks, you can use 1.5 lakhs from 2 lakhs you have received as collateral margin.
Now if you want to carry forward this position to next day, this is where 50:50 Cash - Collateral requirment comes into effect.
Off 1.5 lakhs margin required to Short Nifty Option, minimum 50% (ie. 75k) should come in cash and remaining 75k can come in form of collateral.
Okay, so lets say I get 2 Lakh in collateral after pledging, I short an option and then buy a far otm option to basically reduce my margin (benefit of hedged position acc to exchange).
If I now decide to carry, 50% cash would be of this reduced margin right ? or the initial margin ? basically, I want to know if first I can get benefit of reduced margin by hedging, and then get 50% of it as collateral as well, I can do both right ?
50% cash of the reduced margin, not the initial margin.
Yes, you will get the margin benefit and for overnight positions 50:50 requirement will be on that reduced margin.
Since phase wise intraday leverage would be gone, currently to write one nifty option, mis margin is around 35k in zerodha. This won’t directly become NRML margin of 1.5 Lakh around from dec 1st itself ?
Can you tell me approx how much it would become from dec1st to the next phase and so on ?
No, it won’t directly increase to 1.5 lakhs, it will increase in phases from December 1st.
It has been explained in this post.
I have regular sip’s in some of the mutual funds on that list. How do I pledge those and how is the value calculated ?
If it is in the approved list of securities you will see “Pledge for Margin” option for that Mutual Fund on Console.
The haircut is decided by the Clearing Corporation, so if for the Fund you want to pledge the haircut is 10% and you have invested 100,000 in it, after deduction of haircut you will recieve 90,000.
So if its an sip, margin against my total so far I would be getting, and every month I invest, that more margin after haircut would be available for that month and so on ?
Margin against your freshly invested amount won’t be available automatically, you will have to pledge those units to get the margin.
Just wanted to check if there are any changes to these rules or can I still trade intraday option selling with 100% coming from Non cash pledge?
I would keep cash to cover the MTM.
If I short an option MIS using collateral margin,can I buy an option to hedge that position MIS using the same collateral margin ~
Collateral margin cannot be used for buying options, for that you’ll need cash in your account.
Suppose If I pledge ₹100/- of mutual funds…After 7% haircut,I receive ₹. 93/- as Collateral margin. What happens to this haircut amount? If I unpledge next day, will my balance be ₹. 100/- again if we ignore the plegde charges ?
When you unpledge, the whatever margin you’ve received will be removed from your account. Value of your security will be Current Price * Shares/Units you hold.
When I want to increase the pledged units do I need to pay 30/- again?
Basically, I had pledged a MF, but the units increased due to sip. Would I have to pay 30/- everytime I pledge new units?