Margin call for bull put spread?

Trading
1

Hi All,

I received a notification that I had hit 120% of my margin on a bull put spread.
I had sold 35100 PE and bought 34800PE.

My understanding is that my loss was limited to 12-15k even if market moved below 34800.
The margin collected while formulating this strategy was already 24K.

Why would then I receive this notification?

3 Likes
2

Sir ji aisa nahi hai hamari mahan sebi ko exposure margin chaiye hota hai
Span margin(max loss diff between strikes +exposure margin (2.5% of total contract size ie 31000*25)
Worldwide.it is only span
Sebi ---- hai ruing whole business model
So when market goes up exposure margin increases leading to increase in margin

3

Thanks IRA. This is strange!
If I have hedged position, then this is simply useless :slight_smile:

4

What to do pal this made me completely exit this spreads things will wait till it gets further rationalised till then gold it is

5

I faced a similar issue. I would like to understand why I kept getting margin calls.

6

SAME HAPPENED WITH ME YESTERDAY
MARGIN CALL MESSAGE CAME…AND SUDDENLY MY HEDGED OPTION (BOUGHT) EXITED AUTOMATICALLY
WITHOUT HAVING HAVING FULL MARGIN, MY NAKED OPTION SELLING LEFT

THERE’S NO REPLY FROM ZERODHA @nithin @ShubhS9 @siva

7

I have told you right, for hedge position long leg can be closed by user and system allows it and short leg can remain with increase in margin, so one should not close buy leg or even if one keep stop loss pending order for long leg margin call will come.

8

May be you are having hedge position and you might have placed pending order or closed long leg breaking the hedge, to know exact reason it is better if you can create ticket.

9

Thanks Siva. I have created a ticket.
What’s surprising is I had sufficient in cash in my account. The margin required for the hedged position was 32k. The maximum loss i could incur was 12k. Why the margin call then?

10

You should get a reply, likely because you might have closed hedge leg or placed any pending order on that.

11

Not really. I didn’t touch the hedge position.
I had to square off both positions looking at the email :smiley:

What’s the use of hedging if my margin is greater than maximum loss I can make on thr hedge?

12

Sir this is all because of exposure margin as market goes up margin increases for hedged position the margin required is span(max loss)+exposure margin

13

@siva pls lobby or do whatever you can to remove exposure margin for hedged option trade atleast

14

I believe it will stay and broker can’t influence anything on this.