To get the margin benefit should option be bought and sell later or vice a versa
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You can execute any leg first, you will still get margin benefit.
If you have limited capital then you should execute Buy leg first and then Sell. While squaring-off exit Short leg first and then square-off Buy leg.
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when trading at zerodha, always execute buy leg first! zerodha is really problematic these days, sometimes you get only 200 points range! so you can’t actually benefit from this if the strike price is more than 200 points from the spot.
refer to my thread, first it was 450 points range and then reduced to 200 points. So always execute buy leg first or you’ll be forced to exit your short leg coz you won’t be able to enter buy leg due to zerodha’s restrictions and can’t hedge/benefit for margin.
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Although zerodha does not allow option buying naked out of its range(OI limitation). You can get the margin benefit out of the range by selling the option and then buying the hedge(Buying and then selling wont work if you hedge is out of the range as zerodha wont accept the order)
First sell the strike and then hedge it by buying any strike, even out of the range. Zerodha will allow buying hedge out of the range (But not naked buying)
for.eg Sell 15800CE and then hedge it by buying 15900CE. The biggest drawback to this is if you have 1 lac capital you wont be able to do this as to sell itself you need 1.4lacs capital.
@nithin @siva Can we allow ‘basket orders feature’ to recognise that certain strikes, even if out of the range specified, are being bought as hedge and hence allow them to be executed? It recognises if you first sell it then buy. but if you are executing then in basket, why not allow buy and then sell orders as well. as we system will know margin benefit will be in play even before execution.
Selling first and then buying is very inconvenient if you are trading on low capital.If i have ~40k capital i should be able to sell 75qty (1 lot) of a covered call with hedge even if is out of the range.
In a basket, orders are sent one after the other. So when the buy is being placed, there is no guarantee that the sell order will execute (it can get rejected due to change in price or no margin availability). So yeah, tough to do this, atleast for now. But on our list of things to do.
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I get your concern here.
A naked buyer can cheat the system by placing a ‘market buy on the long position’ and set a ‘limit order far away from spot for the short position’. This will ensure that he will buy the deep OTM option (out of OI limits) and not have to sell short as the limit order wont execute(it being far from spot).
Maybe basket order functionality can mandate both orders to be a “market order” so as to ensure the order gets executed. The insufficient funds margin issue can be rectified by not letting the first order execute in the basket if the total margin isnt avaialble.
This can be a temporarily solution to the problem as most users on kite are traders with low capital, they can get access to the benefits of option selling. This would probably go a long way in improving the lack of liquidity markets are experiencing and promote risk defined trades among amateurs.(with the help of sensibull ofcourse)
I personally have lost quite some money on brokerage+taxes as the basket order executed my first 2 legs without knowing if i have enough funds balance to execute all the legs. For eg. Only 2 out of 4 legs get executed and the 3rd and 4th are rejected. So now my strategy is half executed and i have to restructure my position by exiting the half executed 2 legs. (Now here i m paying brokerage for 4 orders which i didn’t intend to take)
Basically a functionality where the basket wont execute even the first leg of the order if margin for all 4 out of 4 legs are not present in the funds balance. Will save lots of money in brokerage, for us. Not for you 
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This exception to make is quite complex, if we could do it, we would have already done it by now.
@nithin is it possible to give some window time ( for say 30 sec) for basket (buy and sell) options? I.e
allow us to sell the option first even at low margin and give options of either to buy within 30sec or to maintain sufficient fund. If we can’t do so, square off the position by RMS.
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Not possible currently.
Let’s assume I have taken a position of Reliance 2500 PE Buy and Reliance FUT buy, Here which position should exit first?
You should exit Futures position first. If you exit Long 2500 PE first, your Futures position will no longer be hedged and will increase the margin requirements.