This is not a penalty, from today onwards when you sell stocks from your Demat account or T1 holdings, 20% of the sale value will be blocked, this will be given to you the next day. The remaining 80% you can use to trade. We have explained this in detail here , please read.
20% blocking method is permenent or temprory
This is here to stay, unless there are changes to the rules by SEBI.
Hi @ShubhS9,
What is the current MIS margin offered by Zerodha for Selling Index Options.
The latest bulletin shows 3.7X but as per the margin required in Basket order it comes to 2.5X (62K)
What is the correct leverage for MIS index option selling
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A bunch of questions, would appreciate a detailed reply:
1- Margin from pledging stocks: will this be considered for peak margin requirement?
2- What happens if there is a FNO position(intraday) of peak margin requirement: 20L.
There is margin from stocks: 20L and liquidbees/overnight fund of 5L. Will this combination cover the 50% from stocks and 50% cash requirement? Will there be interest charged(zerodha or SEBI) on the missing cash requirement?
3- Is the snapshot time defined?
4- Anyway/alert to know when peak margin is being exceeded before trade execution? API or other?
5- For people using API this will imply a lot more backoffice information required, are you guys working on this? If yes, when can we expect it to happen?
6- The peak margin penalty is 0.5-5% of the trade value. Can you please explain this in terms of a BANKNIFTY futures trade? Which of the percentages get applicable here and on the trade value or i.e. Lots x Banknifty price or the shortfall in margin?
Thanks
Same way as eod margins, 50% cash and 50% collateral is required for peak margins.
No.
No way but don’t do intraday fno trade from proceeds received from holding if you intend to buy back the same stock before close of the market with no extra funds in account.
Nothing as such.
Can check this.
1st day of peak margins. Impact doesn’t seem much, especially considering that the first Mon/Tue after monthly expiry typically has lower volumes. As expected, options trading lesser impacted than futures.
Btw, why the restrictions on intraday leverage by SEBI? There were a few excesses that may have led to this. I remember a few brokers allowing Intraday shorting of Nifty options before for Rs 2000 when SPAN+Expo= Rs1.5L. Brokers taking aggressive risks = systemic risk.
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@nithin we always talk about systematic risk. But lets say today is Thursday expiry and say I short next week 30000 PE. And go long on this week’s 30000 PE for two lots, which is expiring today. Now the margin requird for above trade would be near about or less then 20K. So for 20K margin client could potentialy carry naked short position in markets. How do you handle above scenario. Even I use this when I am not worried of margin penalty.
@nithin - now some how people will get adjusted to it.
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I want to know what is that you will be doing from zerodha end to protect client not going into penalty scenario, will you improve your RMS system so that it closes position automatically if client has negative balance.
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here we have 2 things.
Issue 1 -the whole issue was due to excess margin provided by brokers to take positions
Issue 2 - margin increase due to
movement of market or close of hedge position or physical delivery margin increase
Shouldn’t both issues addressed differently, goal should be to address or penalise issue 1 and your RMS systems can take care of 2nd one
Yeah, we are working on few things to reduce cases which can lead to penalty for clients.
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Continuing the discussion from Peak margin, Intraday leverages, & 2nd order effects - Dec 1st 2020:
Any update on this?
Currently there is no way, ideally client himself should handle this scenario. We are working on few things which can alert clients in some cases and we will try to increase awareness but client also should be alert.
We will have this checked.
i am not worried about client, i am saying about the systematic risk it puts on brokers and markets.
What that hell has happened to sebi? Did someone died related to sebi? How can we become profitable if we meant to produce 1 lakh or 2 lalkhs to get profit of about 1000 or 2000? Why this peak margin. Sebi clearly says that we should just stop trading and start begging on the road. We are small trader. How can we produce so much money to get just a small profit. Option selling require so much money and get little profit after this peak margin rule. Just go to hell sebi…!!
If Someone cut his yesterday’s open position (Option Writing) than will he get that margin for today for intraday and if yes will we be able to give 3 times limit on it
Yes, when you square-off your open position, the margins blocked are immediately released in your account, which you can use for trading without any restriction.
Hi,
What about selling and buying options at the same time ? Why does the basket show one amount while when we actually put in the order it requires a different amount ? Is it not updated or so ?
Regards
Hiren
You will continue to get margin benefit for hedged positions, there have been no changes to this.
There should not be much difference, can you give more details?
