New margin framework is here - to benefit hedged positions

add one more to it your system should be able to recognize say i have 10000pe to reduce the risk later if i decide i want to sell 9900 pe i should be able to sell it n not to ask me place spread order again increasing my brokerage cost and transaction cost it

Brokerage and transaction costs are negligible. It is among the lowest for options compared to rest of the world.

Yes, orders will be placed one after other.

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Let me give me example I was having long strangle 10000pe and 10700 ce as market was looking bullish n I wanted to reduce my bep I wanted to sell 9900pe broker told me I need to reenter,as I have already lost 10000pe again I needed 15k which was not possible as I lost on 10000pe which meant I needed additional funds which I was not having

Now I remember add I more feature if you can :wink: say I bought 11500ce on delivery basis today n say I feel option was too costly I want to limit my loss as well as my profit I want to sell 11600ce it should be possible rather than making me close my buy trade and enter the spread again

Your explanation is not clear to me. Please separate your statements with full stop.
If you want to sell 9900 PE and hold 10000 PE, you should have enough (same) margin irrespective of whether you exit 10000 PE and enter a new spread [Long 10000 PE, short 9900 PE] or if you want to sell 9900 PE alone directly.
why this would need additional funds?

So, here is my problem with Zerodha margin calculator and how I got scammed (well, trusted margin calculator, took positions, then ended up paying HUUUUUUGE margin shortfall). Don’t know where lies the issue, it is NSE’s problem or Zerodha’s problem.
Scenario below:
Margin Calculator says:
SELL 1 Lot of NIFTY 11500 CE & BUY 1 Lot of NIFTY 11700 CE --> costs you around 29K margin
(add the cost of buying option etc. would make it around 31K or 32K)
Now, the interesting part.
Margin calculator says:
SELL 1 Lot of NIFTY 11500 CE & BUY 2 Lots of NIFTY 11700 CE --> costs you around 17.4K margin
(add the cost of buying option etc. should make it around 20K? no?)

Based on this, I thought I got lucky and, kind, of doubled my positions.
At this stage, even on Kite platform (obviously during market hours), the dashboard also reflected the same, showing that I have enough margin/balance unused.
I went to bed that night not thinking much.
Next morning when I see, KITE says I have HUGEE -ve balance and rest of the story is explained in this thread itself above.
Now, who’s fault is it? Zerodha or NSE?

Or mine?

Margin calculation is correct.

Maybe you used unsettled funds to take the trade or you failed to maintain 50:50 Cash - Collateral ratio (for overnight positions, at least 50% margin should compulsory come in cash or equivalent and remaining can come from Collateral).

  1. I did not have any unsettled funds. I had no previous opened positions prior to that day. I went in with 100% cash that day.
  2. I do only f&o. No collateral. I don’t have any equity etc.
    It’s all there in my ledger. I opened ticket twice for explanation. Still no satisfying answer.
    So I settled myself with this new normal, not to do it again :slight_smile:

I have asked team to check and they did, as said it seems EOD span is increased and charged accordingly, rarely that can happen.

No problem Shiva. I have moved on now. Guess this is new experience for all parties…

@nithin @siva I have observed that the margins on the last two days of monthly expiry are going abnormally high on hedged stock option positions, as against just 2X. Take an example of a credit spread, on which the margin has come down after the implementation of the new margin framework for hedged positions. However, on the last 2 days, the margin goes up exponentially. I think you are increasing the margins on the short leg separately as per the old calculation and not giving the benefit of the hedge during the last 2 days. Is that a correct inference or am I missing something?

I’ve explained here how margin benefit works on last two days of Expiry, you can give it a read…

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If I am executing this strategy on intraday, what will be the margin required?

@ShubhS9 @siva
Why hedging benefits doesn’t apply to shares (instead of futures)?
Any reasons?
Example:- buying shares (instead of futures) + buying puts

Not much benefit in MIS for strategies as we block 100% of exposure for intraday also.

Infra should be built for that in India at exchange level.

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What if the exposure is less but span is high? in intraday case

Then you get reduction in span, but for hedge strategies it will never be that way.