Yeah, intraday is 40% of SPAN + Exposure. So if SPAN+Exposure goes up, intraday also goes up.
Is the Margin Calculator in the Zerodha updated for all segments?
Like FnO/BO/CO? If not, when will it be updated.
The new margins go up tomorrow at the exchange. Once they update, it will get updated on the calculators. So most likely by tomorrow evening. But roughly 5 to 7 % increase over the current margins.
will option buying margin be increased?
Is there any margin in option buying? 
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No there isn’t. But if you are having long options in stock option contracts which are compulsory physically settled on expiry - you would need margin from 4 days before expiry. This had to happen to ensure long option holders have enough money to give/take delivery of the entire contract. From the email we have sent to all our clients.
The margin requirement for Long/Buy option positions in compulsory physical delivery contracts
From September expiry onwards, the exchange has mandated that margins be blocked for long options (Call & Put) 4 days before expiry (i.e Friday EOD - the week prior to expiry week) on any compulsory physical delivery contracts. Currently, there are 45 stocks which are settled with the actual delivery of stocks, this list is going to increase to cover all F&O stocks in the next few months. Check this list to stay updated on stocks which are to be compulsorily settled physically.
Margins are required to ensure that clients with long options have sufficient funds to either take or give delivery of the underlying stock on expiry. The delivery margins applicable will be a percentage of the VAR + ELM margins (Check out this NSE FAQ to know more about VAR & ELM). The delivery margins will be applicable in the following manner.
Day
Margins applicable
Expiry - 4 Day (Friday EOD) 20% of VAR + ELM
Expiry - 3 Day (Monday EOD) 40% of VAR + ELM
Expiry - 2 Day (Tuesday EOD) 60% of VAR + ELM
Expiry - 1 Day (Wednesday EOD) 80% of VAR + ELM
On the expiry day, you need to maintain a margin of 50% of the contract value (or SPAN+Exposure), whichever is higher. Please maintain the required margin in your account to ensure that your positions don’t get squared off (For long puts, you need to hold the stocks in your demat along with the margins). We have explained our policy on settlement of compulsory delivery derivative contracts here in detail.Regards,
Team Zerodha
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I have couple of open short positions in NIFTY for 11200S and 11700S. Have covered calls at 12000B and 10900B.
How much margin will I now need. Even zerodha support cannot answer this question despite being on the line for 15 mins.
Earlier margin was 104000 approx. Any immediate help through official channels will be helpful.
Why can’t things be kept simple?
This is what the World’s largest Option Exchange does or requires!
Why SEBI is doing all these drama? Awareness cannot be promoted with penalty rather informed participation should be encouraged. I think first the lot sizes must be brought down such that retail traders can take less risk. These things are creating an additional veil of resistance.
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So when is zerodha going to update this new calculation in its margin calculator? Because many of us retail traders looks at the margin calculator of zerodha to know how much margin is required without bothering much about the concept.
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If you go through circular what NSE has put, it says SPAN files will be updated only from Sep 21st. So all the calculators will get updated only by then. Until then, the math to remember is - around 6% more margin than current for index and 10% for Stocks.
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@nithin
As per my understanding, physical delivery is not compulsory up to 3 CTM long options; will this additional margin is also required for these 3 CTM options from t-4 days ??
Struggling to understand (and am not interested) in the theory/math and just want to know how this is going to affect me when I trade intraday. Currently I assume the margin requirement for bnf is 8%. Read @nithin saying assume 6% extra margin for index so that means a total of 14%? So at current rate the margin (SPAN+Exposure) would be 1.5 lakhs and for intraday at 40% would be almost 61k…ie double of what we are paying now?
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Ah my bad if I wasn’t clear, 6% additional to the current margin. So if margin now is 70k, it will be 6% more or around Rs 4200 extra. But by november it will be overall around 25% more than current margin. So around 17.5k more.
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Where can I see the physical deliver of options stocks
Check this doc, has updated list of all stocks whose F&O contracts which are physically delivered on expiry.
@nithin
Why is the retail trader taking all the crap from SEBI and NSE? why dont all the brokers goto court and put a stay order on this useless increase of margin from SEBI? A better way to protect innocent and new traders is through education and make it mandatory to pass some minimum test in order to qualify to trade derivatives not by increasing the margin which kills the market.
Here both the brokers and the traders are at a huge loss due to loss of liquidity and many would leave trading due to less ROI. markets are known for high ROI because they have high risk.
@nithin
You guys at brokers have the ability to go against this and take SEBI to court otherwise SEBI has no resistance. Simply killing the free market due to excessive regulation.
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hmm… for a market like ours where - currency can do the jig the way it did, and where corporate governance or default issues keep coming up - is 8% on index and 12.5% on stock derivatives enough to cover for a one day risk (intraday or overnight). I don’t know. 8% going to 10% or 12.5% going to 17.5% may not necessarily be that bad in the long run. Yes of course it affects in the short run, more for us as a retail brokerage firm than anyone else.
Below is an email that I had sent to the broker associations to maybe push for one big change - which they are already working on.
On the group it was indicated that there is a possibility to push for incorporating all margins within SPAN, instead of having SPAN and Exposure separately.
Considering that the recent circular to increase exposure margin (ASM adding to Exposure) was amended to incorporate that same change within SPAN, I am guessing it will be the right time to request for that change as they would have analysed the impact of increase in Exposure vs increase in SPAN.Today, the way SPAN and Exposure is blocked, the incentive isn’t as much for a person who trades strategies, hedges, arbitrage’s etc. If the exposure was to be included as SPAN itself, the benefit of taking any of the above strategies will actually show up in the margins a lot more.
Take this below strategy for example, Long futures + Long puts. Even though SPAN dropped from 42k to 24k because the position is hedged, the Exposure margin remained the same at 25k. If this wasn’t a separate exposure margin, but was included within SPAN, this Exposure would have also dropped to around 13k. So this entire strategy at 38k vs 50k.
One of the reason why regulator is so focused on derivatives segment is because of huge amount of trades (trading turnover) vs open interest and high derivatives turnover vs cash market turnover. If margins encouraged people to trade more strategies vs just trading naked, automatically people will hold positions for longer and hence reduce trading turnover and also increase the open interest. The bonus is that trading strategies is generally lot more safer than trading naked.
Hopefully this makes sense.
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Man, I feel you. That’s why I created ARTI which stands for ASSOCIATION OF RETAIL TRADERS OF INDIA. Come, join. Let’s share our sorrows and possibly go to court against this. I will PM you the link to join. Peace.
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@nithin;
India is matured economy; currency has depreciated due to widening CAD and price of crude which has risen. Any market can break 10%. Even the US market dropped 40% in a matter of days in the huge crash 1987.
You cant start wearing an armoured suit just becuase you know one day you will die. We are know we will die dont we, but we dont stop living.
That doesnt mean you start increasing margin for this one isolated event that comes once in a decade or even a generation. And if doesnt cause huge losses so be it. I think SEBI lacks maturity and they are becoming protectionist.
The reason of excessive derivative turnover is SEBI dosent allow short selling in cash/equity market. So there is no choice but to look at derivatives if you wanna go short. The whole idea of free market is let the market decide and not SEBI try to control it.
The idea of merging SPAN and exposure is good but it is still not good enough.
Worldwide most markets only SPAN is levied on derivatives thats the whole idea of having derivatives in the first place. Here SEBI has not only increased SPAN to crazy values but also continues with exposure margin. Exposure Margin shouldn’t be mandatory; it should be left upto the discretion of broker and clients. Only Span should be collected by exchange.
@nithin
You have an excellent platform in Zerodha. Highly commendable job! As a vanilla retailer my voices cant be heard in SEBI or the exchanges. But it is our earnest request to take this matter in court if SEBI is not yielding and we all will contribute valid points which our case stronger. SEBI is relying on committee reports in which we have no representation. Like for FPI there is strong lobby to take up their case. But for us; we rely on brokers to make our pitch.
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…As the number of brokers increased, they had to shift from place to place, but they always overflowed to the streets. At last, in 1874, the brokers found a permanent place, and one that they could, quite literally, call their own.
Source: https://www.bseindia.com/static/about/heritage.aspx?expandable=0
Small retailers become tenant in her/his own house…
Source: Fearless Girl - Wikipedia
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