Hi
I placed a NRML long order on an option which got executed. But at the same time I had placed a SL-M order for stoploss, which was canceled stating that there was not enough margin in my account. I understand that I didn’t have enough margin to sell an option contract in NRML, But isn’t SL-M by definition a square-off order and not equivalent to writing an option? Why would this then require extra margin?
Thanks
In this case, the SL-M is considered a square-off order, only if it is placed once the NRML long order on the option is executed. But since you placed the orders simultaneously, the system would regard the SL-M order as an option writing and therefore would be canceled due to margin shortfall.
Although your question is a little ambiguous, I am going to assume the 2 scenarios because of which your SL-M was rejected :
1) You have bought the option in NRML and you were trying to place the SL-M in buy order window
Many people are unaware that if you have bought some thing and want to place a stop loss then it should be placed in the sell order window. If you open a sell order window and select the order type as SL-M and submit it then your order would be pending and will not be rejected as it is an opposite order . But, if you open a buy order window and select SL-M then your order would get rejectedn(if you do not have sufficient balance) as you are placing a request for a new buy order.
2) You have bought the option in NRML. Now, you have placed a target order and also were trying to place SL-M
In this scenario, the order will get rejected because you have a buy position and would want to place a stop loss order which is also a sell order. Also, shorting of option requires more margin amount.You can check the same by clicking on our span margin calculator link below.
https://zerodha.com/margin-calculator/SPAN/