There was margin shorfall at 1159 hrs, 02.09.21 of 2.4 lakh, for which I did RTGS at 1205 hrs.
Kindly tell if any margin penalty will be cut as I was late by 6 minutes??
We never know, as it depends on exchange taking screenshot time. Also if it due to loss that is okay as m2m is not covered under peak penalty.
(1) BUY : BANKNIFTY2190236400CE : Expiry 02Sep2021
(2) SELL : BANKNIFTY2190937000CE : Expiry 09Sep2021
(3) BUY : BANKNIFTY2190236900PE : Expiry 02Sep2021
(4) SELL : BANKNIFTY2190936500PE : Expiry 09Sep2021
I took the above 4 positions , in “NRML” .
I received the Margin Benefits too .
My question is ; since today is the Expiry ; will I attract the peak margin penalty on 3rd September ?
If yes , then , will I attract the peak margin penalty at 9.15 am tomorrow ? or will I get some time , tomorrow , to replenish the margin ?
For today evening only you will be attracted penalty, so you should close before 3.30 or take next week hedges or transfer money today before 10pm.
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How can an option seller reduce margin requirements… stop loss can reduce risk of trader… so can this ( stop-loss for contract ) be a strategy to in increase leverage?
You can hedge your position by buying an option. This will provide margin benefit and decrease the margin requirement. You can check out this post for more details.
say . eg. i was having margin Rs.100/= and i short-sell an option wherein at the time of executing the Nrml trade ; the margin required was also Rs.100/= .
BUT ; after taking the trade ; the margin used is showing Rs.102/=
my question is : will i attract the peak margin penalty/interest for that Rs.2/= ?
Yeah, so always maintain 5% to 10% free cash to cover this and m2m for futures.
How many days does NSE/ clearing corporation take to cut peak margin penalty from day of occurrence of margin shortfall?
5 working days.
Siva,
As per what you folks have mentioned here: How can I use Baskets to buy options outside the Nifty or Bank Nifty range? for the purpose of Buying far OTM strikes in Zerodha for the objective of hedging, you are suggesting that we should execute the sell leg first only then you allow buying of far OTM strikes.
at other place here: How can I place basket orders on Kite?, for the purpose of taking benefit of margin leverage for hedged positions, you are suggesting that we should execute the buy leg first and then you will allow margin benefit to sell. so from the above it’s clear, you are contradicting. If I want to obviously take benefit of margin leverage for hedged positions by buying far OTM strikes.
Should the SELL order get executed first or the BUY order???
for margin benefits I need to execute the BUY order first, but since the strike is far OTM you guys will not allow, until you guys see a open sell order in the system, so how do we handle this??
No other way as of now, we are working on something else which should reduce OI issue in coming months.
We need the exchanges/sebi to either provide us a window of 5 mins to correct for margin shortfall, for changes due to big market moves or increased volatility.
Else if we can have a more continuous margin calculation from the exchange, then we will be spared from sudden margin moves.
I have seen swings from +6lks to -5 lks after one update say at 1 pm.
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Let’s say I have 100 shares of Reliance in my account, no other shares or margin. Can I sell these 100 shares and use 80% of the sell value to buy shares of another scrip on the same day ?
For example, sell 100 shares of Reliance at 2000 on Monday morning and buy 80 shares of Titan at 2000 on Monday afternoon. Will that qualify for peak margin penalty?
You can use the 80% proceeds received to buy shares of another scrip. There won’t be any penalty.
I understand exchange updates SPAN 6 times a day. Lets say after I take an options short-position at 2PM, I have a margin of +5 lakhs remaining in my account. Now, lets say based on the 2.30 SPAN update, my margin goes from +5 lakhs to -2 lakhs. Now assuming the broker updates the SPAN file only at 2.45 PM and a peak margin snapshot was taken at 2.40, will there be a peak margin penalty?
In other words, exchange sends new SPAN file at 2.30, broker updates it at 2.45, peak margin snapshot is taken at 2.40. In this case, when the snapshot is taken at 2.40, will the margin show as +5 lakhs or -2 lakhs?
@nithin @ShubhS9 @siva
@Roy, Yes this could possibly happen. However, what we’ve seen is with the implementation of SEBI’s new margin framework implemented in June 2020, intraday margins rarely would go as high as you’ve suggested in your example.
Its normally good to have 5-10% additional margins to cover for peak and EOD margin requirements.
Thanks for the reply @MohammedFaisal
My account size is 3 crores+ and I’ve seen margins go up intraday higher than this a few times.
A 10% additional margin would mean setting 30 lakhs aside and this has a huge opportunity cost involved. Would prefer that I keep these funds in the Equitas bank account where it earns 7% interest and transfer it as and when required.
I’m trying to understand how this margin snapshot system works, so that I can optimize and reduce the amount of idle funds kept as buffer in the account.
- What are the data points that the 4 random intraday margin snapshots capture?
- If the snapshot is taken in between the time that the exchange sends a new SPAN margin file and when the broker updates the file (I assume there is a small lag between receiving and updating SPAN margins), what margin will the snapshot capture, based on the old SPAN margins or the new one?
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@ShubhS9 I have a query.
Suppose I sold Rs. 1 lakh worth of Reliance shares from my holdings. I receive Rs. 80000. Now on that day, am I allowed to use this Rs. 80000 to do intraday trading in Reliance itself? I buy Rs 80000 worth and sell Rs. 80000 worth of Reliance on intraday basis. I take no other trade and don’t hold any Reliance shares at the end of the day. Is this allowed?
Yes, you can use the proceeds recieved to trade in same stock.