If I own 1 lot of XYZ stock in Zerodha and want to write a call option on it, do I need to maintain a margin? If so, why does the exchange or clearing corporation require a margin, since I am already holding the underlying stock and should be risk-free?
In India, cash and F&O are treated as separate segments for risk management.
Even if you hold the shares, the exchange doesn’t recognise them as a guaranteed hedge for a short call because those shares can be sold, transferred, or pledged before expiry. So the short call is margined as a standalone risk (SPAN + exposure).
Shares can be accepted as collateral (to recover losses if needed), but they are not treated as a live hedge for margin reduction.
That’s why covered calls still require margin in India.
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