I want to understand margin requirements for f&o. During the election i took a naked put position. Even though my position was gonna make profit, due to high volatility my margin requirements drastically increased due to high volatility. Something called Extreme loss margin kicked which i was unaware of. More 2% of positional value was demaned to maintain.
I also observed that margin requirements increase if position is making loss on M2M basis.
I want to understand everything about margins, how its determined what formula is used. I wanna educate myself and know whatever i dont know unlike my election position wherein ELM came as surprise. Kindly help how do i educate myself.
Hey @gautam_pinjani
In India, buying and selling in Futures and Options (F&O) is well-regulated by both SEBI and Exchanges. For F&O trading, you usually need to meet two types of margin requirements:
- Span margin,
- Exposure margin
The total margin equals the sum of the Span margin & Exposure margin.
The margins are increased during periods of high volatility to maintain market stability. This is why your margin requirements might have increased despite your position being potentially profitable. MTM losses also increase margin requirements as it indicates increased risk.
The exact methodology for margin calculation is complex and depends on factors like market volatility, understanding the Greeks (Delta, Theta, Gamma, Vega, Rho), etc. According to it better to use calculator for this there are various available online.
If you are new to markets, I would suggest you first go through leverage products and how they work. We have an initiative Varsity module that explains this beautifully. You can check also our support portal article related margins
Remember, knowing about margins and their requirements is important as they directly affect your trading gains or losses. Always prepare before you trade and understand the margin requirements before you start.
Hope this helps you 
No am not new. Just unaware of certain margin requirements. Is there a detailed source where margin requirements are explained?