New margin framework is here - to benefit hedged positions

[ShubhS9]

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).

[madhavreddy]

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

[siva]

@madhavreddy

I opened ticket twice for explanation. Still no satisfying answer.

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

[madhavreddy]

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

[AmitUM]

@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?

[ShubhS9]

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

Hedging and physical settlement

This is how it works on last two days of Expiry Week. Eg. You hold Short ITM 1800 Call and Long OTM 1880 Call of Reliance, current margin requirements for Shorting 1800CE are 271k and after buying 1880CE it comes down to 70k giving you margin benefit of 200k. On last two days of Expiry Week, margin requirement for ITM 1800CE will be twice of 271k ie. 542k, after factoring in 200k margin benefit you get for holding OTM 1880CE your margin requirement will be 542k - 200k = 342k. The calculatio…

[khishor]

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

[Nikhil_Wadibhasme]

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

[siva]

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

[siva]

@Nikhil_Wadibhasme

Any reasons?

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

[khishor]

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

[siva]

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

[IRA]

any further discussion happening in sebi to bring risk based margin system for hedged trading
1)roi will improve significantly
2)people will stop buying far otm worthless option
3)new breed of traders can began and history can be written
4)as margin will increase for intraday trade this will increase impact cost
5)pls make our voices heard to sebi (brokers pls definitely you will have advantage too in terms of revenue)

[TradeB2B]

@siva really is irritable to trade in nifty , i try to do a option strategy in nifty as bear call spread 11700 sell and 11800 buy but what use , the system is rejected , i cannot get any nifty trade in zerodha , even i am trading with capital of 50 L you guys are not taking a serious about this OI problem , i am really forced to look other broker
even i am paying on different trade as commission to zeroda itself 30k every month , but you are not helping us …

you are giving permission to trade very close to the LTP , its not possible fo me , i am a very conservative option trader ,you are zipping the strike price , better ban nifty trading from zerodha , i really fedup ,
Dont tell to open in ORBIS , I lost lot of oppourtunity to trade in nifty option , because of your OI and shut

[siva]

@TradeB2B

i try to do a option strategy in nifty as bear call spread 11700 sell and 11800 buy but what use , the system is rejected

Can you sell first and then can place buy order as same as sell quantity.

[TradeB2B]

ok i will try

[khishor]

@siva, Nifty has a freeze quantity limit of 7500. If someone has to buy 30000 call option in nifty. How to do it in one click?

[ShubhS9]

@khishor

Nifty has a freeze quantity limit of 7500. If someone has to buy 30000 call option in nifty. How to do it in one click?

You can do so with help of Basket Order, where you can create 4 orders of 7500 Quantity each and execute, read this post to know more about Basket Orders.

[sjmrng]

Shiva, pls help me to understand the margin requirement. I want to execute Bfly on stock on last friday ( today) before monthly expiry , I have following questions—

1. Whether physical settlement will affect me ( I have complete hedged position) if I donot cover it before expiry.?
2. For naked sale probably attracts extra margin during last week of expiry , whether hedged position like Bfly also attracts extra margin during last week of expiry.

[siva]

@sjmrng

Whether physical settlement will affect me ( I have complete hedged position) if I donot cover it before expiry.?

Yeah, more margins are still required.

@sjmrng

For naked sale probably attracts extra margin during last week of expiry , whether hedged position like Bfly also attracts extra margin during last week of expiry.

Yes, it requires.