I hold HDFC 300 stocks in my Zerodha demat but still when I’m selling call option of HDFC then I need to maintain margin in my account. This more margin maintenance does not look correct to me as I’m already holding those stocks and also in US market for this kind of call option selling there is no need to maintain margin then why Zerodha is asking for this extra burden margin?
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This should help you -
Even I’d like to know what the explanation behind this is.
sorry but this does not answer my question
Directly message one of the admins, they will help you explain better. It’s been some time since you made this thread and you haven’t got a response apart from me. So DM them for help.
There is no cross margin benefit for holding underlying shares and Short Options, To take a Short Option position you will have to maintain the SPAN + Exposure margin as requested by the exchange.
You can pledge the shares you are holding and can use the margin you receive to fund your Short Option position. Do keep in mind for overnight F&O positions, minimum 50% margin should come in form of cash and remaining 50% can come in collateral.
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But why is this as a person is holding a stock then why is the need for maintaining margin, in US market they dont ask any margin if we hold stock then why here. Also suppose I sold 10 different option call contract and also holding those 10 contracts equities already in my account then maintaing again call option margin will be too expensive?
But this is India, it is different here, one way to reduce margin is by pledging those shares. Know more about pledging here.
it is not about country…there is no logic in this and just broker is holding or locking more money when it is not needed.
I meant rules are different in India, these are not set by broker but by regulators.
There is no fault of any broker in this case…
This rules are set by the exchange…
can we contact or raise issue with exchange for this? any suggestion for portal please suggest?
Hey I know It does not make any sense to ask for the short option margin when you want to sell a call on the shares you have. And this is how it works in India. Brokers should be challenging this policy to Exchange or even with SEBI if needed. You and me cannot directly influence this policy by speaking to NSE/SEBI.
I think this policy was written by someone who does not understands Options. @siva can you help us with this problem please? I really do not like the answer that this is how it works in India
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As said you can pledge those shares to get margin to use for shorting options.
Earlier if shares are in demat is enough to get margins but this has resulted in many issues like misusing of client shares/ using other client shares to fund pro or other clients etc.
In US the lot size is 100 shares irrespective of share or it’s value, I mean there are some structural differences also compared to our country.
As said broker has no say in these things, we need to follow the rules but said that if we have any opportunity we will give our feedback to concerned regulators to think about it.