Margin usage for option selling

Hello Zerodha team

Wishing you happy and prosperous diwali

I have a question

Background:- I have pledged my share to get margin money as collateral and I don’t intend to use cash therefore
As per margin rules of SEBI i know that i can’t carry the position overnight as i have to have 50% cash so to avoid that i have started option selling on intraday basis but if in any day i incur big loss at the EOD then what are the necessary requirements to be fulfilled to avoid any damage or penalty

Thanks and Regards

Have cash, and have sufficient margin with a cash component.

If you do not any cash in your account then your account will result in negative balance. You will have to add funds to your account in such scenario else there will be interest applicable at 0.05% per day.

If you fail to add funds, your pledged securities could be squared-off to the extent of loses. You can check this support article for more information:

You need not have cash in the account. You just need to have a cash equivalent mutual fund or ETF

like liquid fund, money market fund, overnight fund etc see here

for the loss part, you need not unpledge or sell your holding if you can compensate the loss by adding funds. If not - yes

Add balance to your account so it doesn’t go negative. Thanks for the articles mentioned here @ShubhS9. Very helpful.

Is it mandatory to add funds before 12:00 AM on the same day or can it be added before the start of the next trading day?

You can add next day too. Best to add on the same day to avoid any interest being charged on the debit balance.