Peak margin, Intraday leverages, & 2nd order effects - Dec 1st 2020

Just to confirm, wrt only F & O trading, the changes will be:

  1. Intraday: No changes, only leverage will reduce slowly
  2. Overnight:
    a) If you square off positions on the short side, can utilize funds anywhere.
    b) If square positions on the long side, can use it only to buy other options on same day, not trade futures, short options, or buy stocks.
  3. Profits for Intraday can be used to take new positions only on T+1 day.

@ShubhS9, is this correct?

Please read the article linked above, if you sell holdings and plan to buy them back then you should not use those funds for intraday trading doing so can result in peak margin penalty.

Why doesnt the entire trading community protest against all these useless and utterly stupid orders of the SEBI by shutting down the markets until all these orders especially the decrease in the margin/leverage is completely withdrawn by the SEBI. At a time when lots of people are actually getting interested in trading and investing, the best thing to do was probably to give maximum leverage to the traders but SEBI has done the opposite. If the existing leverage isn’t available or if it is further reduced, I am definitely gonna stop trading and might look forward to the US or European markets for trading. The trading community including the brokers and other counter parties involved must protest against the SEBI instead of blindly accepting whatever they say. Period.:triumph::triumph::triumph::triumph::triumph:

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So I have two questions

  1. If I use nrml order to go long on an option, will I be affected by this new regulations and also what if I hold that position overnight what will be the situation of my margin in that scenario ?

  2. As of now what I was doing was taking a trade in the morning, get a quick profit and then use that initial capital which I used to take the previous trade on the same day in another trade. If I am not wrong we could use 80% of that capital on other trades on the same day. Will this practice of mine be affected by this new regulations in any way ?

  1. Right.
  2. a) and b) both right.
  3. Right. Profits made in F&O can only be used from the next day.

Here, the question asked, is about equity cash market and not the derivative market. So, kindly explain about the same.

Thanks a lot. :+1:

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No changes.

No changes. 80% capital can be used only if you sell from demat holdings.

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It’s very confusing for me please clear my douts

  1. Am trading in equity am doing only cns…
  2. Is there Any restrictions for equity Cns
    3.In equity CNS IF I sel my holding shares worth off 1l of fedral bank then can I buy any other shares using this 1l in same day or I can buy only up to 60k
  3. if am not going to do mis strictly… in cns any panalty chances are there or not
    5.today am seling fedral bank in cns and the same day am trying to buy it again in cns is there any problem

Correct, spot on.

please send example the impact of Peak Margin Penalty…

When you sell shares worth 1 lakhs, you will receive 80% of this which you can use to purchase other stocks. Remaining 20% you can use from the next day.

If you sell shares worth 1 lakhs, you will be able to buy back shares worth only 80k.

Would request you to go through this article, for detailed explanation.

@nithin I have seen margin requirements changing during the day despite no change in NRML/overnight positions in F&O, perhaps due to changing volatility. For an account funded with approx. 20 lakh, I have observed the free margin balance going back and forth during the day between +3.0 lakh and -1.8 lakh with no change in positions. Before the peak margin regime coming into force, the free margin generally restored to positive territory before 3:15 PM, allowing me to not close/reduce positions unnecessarily. The need for reducing positions was rare as I kept a free buffer of almost 15% of funds.
How does the trader having NRML positions deal with fluctuating margin requirements during the day to be compliant with peak margin regime?

So long story cut short … Present bank nifty ard 29500 lot size 25 so 29500*25= 7.5 lakh…so gradually and finaly after aug 2021 all have to pay this much margin for 1 lot of bank nifty either it is mis,simple,cover order or normal…am i correct sir ?

If iam doing nifty weekly option selling in 3rd dec2020 expiry if I sell call and put both and it is hedged and if I book profit on 1st Dec and square off all legs will I get the full margin to trade after booking profit on 1st which is initally blocked

You do not have to pay full contract value, only SPAN + Exposure margin which is currently around 160k.

If I buy nifty 50 vy default it asks 1.5 lak how do I make sure both get executed and I pay just 30 k I mean nifty long and put buy

Even after aug 2021 ?

When you square-off your trade, the margins are immediately released back in your account, which you can use to take other trades.

Why SEBI doesn’t care about liquidity/volume?
They have hired simply stupid people, when they get bore, they just do something.

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