Margin and Leverage for Combined Options Writing

[Tapastanay]

Good evening sir!
My queries as follows…

Q1. While writing any option it blocks huge margin, however, while combining it with buying of same option ( CE spread or PE spread) or writing opposite (CE & PE write) option then total required margin reduces by around 35%. But it becomes difficult to figure out how much quantity can be ordered with a specific amount. First I have to take buy position (in case of spread) then to write. And only then I can find out how much margin benefits is given.
With Zerodha Margin calculator I can check any options margin. But for margin benefits it becomes difficult to guess. Is there any calculator or procedure to find out approx total margin in case of combined trade… (To be used for different strategies).

Q2. While this margin benefit is given for NRML type option trading, the same benefit must be given for Intraday MIS option trading too. So in my understanding, for MIS option trading one can utilise the double benefits on margin.(as intraday margin is comparatively quite lower than that of NRML).

Awaiting your illustrations on these Qs.

Thanks and regards.

[ShubhS9]

@Tapastanay

With Zerodha Margin calculator I can check any options margin. But for margin benefits it becomes difficult to guess. Is there any calculator or procedure to find out approx total margin in case of combined trade… (To be used for different strategies).

Just calculate premium you are required to pay for Long Options position, and add that sum to Margins Required shown on margin Calculator.

@Tapastanay

While this margin benefit is given for NRML type option trading, the same benefit must be given for Intraday MIS option trading too

Margin benefit for hedged positions is given for MIS orders as well. Though there is no leverage offered for Buying Options, you will have to pay full premium.

[Tapastanay]

@ShubhS9

Just calculate premium you are required to pay for Long Options position, and add that sum to Margins Required shown on margin Calculator.

I think you haven’t got my point… What you are suggesting is the normal way to calculate net margin for separate trading. But while I’m going for hedging, and to avail the margin benefit definitely I would have to be long first before shorting. Then the margin benefit will play its role. In that case required margin will be quite less than that of the calculated margin as you mentioned. But how much benefit I can get, how will it be found out through any math before taking position?
Hope, I could explain my point clearly.

[ShubhS9]

@Tapastanay

But how much benefit I can get, how will it be found out through any math before taking position?

No need of any maths, you can use Margin Calculator to calculate margins. You can add multiple strikes there and can check how much margin benefit you are getting.