Margin from pledged securities for buying options

Hi, I am seeing a few brokers giving the facility to BUY options from the margin received by pledging securities.

Why is Zerodha not giving such a facility?

I know buying options is generally low value, but for my purpose I need to buy Dec2023 deep ITM PUTs, which cost around Rs. 1.25 lakh per lot. Hence, is there anyway we can get the facility to buy options through margin from pledged securities in my Zerodha account?

If not, why not? since other brokers are providing it.


Can you name the broker? Would be interesting to know how are they doing it.

Unlike selling, buying options involves upfront premium payment (in cash to the counter party). How can this even be achieved with margins? Is the broker paying it on behalf of the buyer? And when the option expires worthless, is the broker liquidating the pledges?

Margin is only a collateral, and both the buyer(at the time of buying) and seller(at expiration for itm options) have to settle the trade in cash.

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@abcd5662 All these are the same points I am wondering about and haven’t been able to get answers for. Dhan is providing such a facility, just not sure how.

If some brokers is giving you margin facility for buying options, that means he is paying money out of his pocket. For any such transaction there will be Interest Applicable.

Kindly mention those brokers here, who are allowing pledged margin for buying and holding options overnight.

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I went through Dhan website to look for the Interest Rate applicable, and it is not documented anywhere on the website. So they can charge any interest they want and if you dont’ pay that interest you can go to jail.

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@GoutamHebbar Interesting :joy:
Direct jail bro?

Hi @ShubhS9 , can you please guide with relevant logic. It would helpful to get this on Zerodha, even if there no poosibility, it is still helpful to know why Zerodha is unable to provide this option while others can.

Kindly mention who those other are?

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Dhan is asking for 50:50 cash or cash collateral for intraday also. In Z and Exch rule, this requirement is only for overnight positions. 18% interest is charged by Dhan.
Unless everything is not compared equally, it doesn’t make sense.

And even if Dhan or some Broker did offer it without any T&C’s, its more like a marketing strategy bcos of their tiny client base. its not going to work in large scale.

Hi Jatin,

We had answered this on a different post as well, linking it here.

Pledged amounts can only be used for instruments which have margins associated with it (like futures and short options) and not instruments which require you to bring in the entire cash amount (like buying stocks and going long options).

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