Hi,
No way to utilzed full benifit of new margin framework due to not allow trading in OTM contract.
This is very frustrating.
In margin calculator it is said 9400 to 10700 allowed for other expiry but I can buy 11600 July option. Can you explain?
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Dear @nithin,
As per new margin policy SPAN margin increase with volatility and Exposure margin decrease in short strangle.
My QUE? is is still exposure margin requirement need by exchange NSE or SEBI for cover risk.
As it could be better to reduce exposure margin to at least 50% from current req, is it possible ?
it will be gr8 if they remove exposure margin req.
It is required to save brokers/system.
For many strategies span is nil or very less, if client closed hedged leg then position is naked with zero margin but with unlimited risk, this can screw entire system.
Also now margins have reduced a lot for hedged positions, personally I think asking more reduction is little too much.
thank for replying.
if my max loss is fixed in iron condor strategy…then why margin required keeps changing through out the day @siva @MohammedFaisal
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@gaurav_choudhary, how big of a difference are you seeing in the margin changes during the day?
Is it lower single digit thousands?
That is 1% to 2% of required, may be because changes in span and exposure during the day.
Can we force traders who have hedged position to exit short position first? In other words, don’t allow them to exit long option position first.
If this can be done, the margin requirement for a hedged trade can be reduced to maximum loss possible. Example: I buy Tatamotors 80 PE and sell 85 PE.
Maximum loss would be 4300 * 5 = 21500 [lot size * difference in strike prices]. But the margin for this strategy is more than that with reduced margins.
@siva: Can you respond to this? Thanks.
Yes this should not be that tough…you only need to check available margin in client’s account…if it is enough for naked option selling then allow them to get out of Longs else just show a pop-up asking to close out short positions(short options or future positions)
While your max losses are capped, the difference in margin can be for the following reasons:
- Exposure margins- Exposure margin is charged on the contract value(of the underlying) so if there is an increase in the underlying, the exposure margin will raise. Say Nifty Spot at 10000, the exposure margin charged will be Rs 15K(10000 * 0.02 * 75), if Nifty rises by 200 points, this will be Rs 15.3K.
- SPAN changes- Will your max losses are capped, there will be minor changes in margins due to change in price scan range(volatility).
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Is there a way to disable margin calculation while placing orders on kite. It takes so much time that one is not able to scalp nifty
Does it stop you from clicking sell/buy button?
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@siva, @nithin, I moved to other broker because of narrow range for nifty OTM options. Looks like now you are allowing 1000 points wider for nifty, is it temporary?
Shall I move back to Zerodha? The reason is I adopted to Zerodha. Please revert me on this.
We are seeing gradual increase on market OI after this new margin framework so hoping we can continue to allow wider ranges but not guaranteed for now. Also SEBI limit on market participants will end 25th of this month so another boost to market OI may come.
Will the 15 percent cap be removed after this expiry, on open interest?
if this is happening then there is no need of orbis route ! am I right ?
No, I am talking about other temporary cap SEBI has put on participants in march due to increase in volatility.
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No I am referring temporary cap.