Yeah, we are already doing EPI.
Thanks, still there is no clarity among all, every entity is interpreting in it’s own way, maybe we need to wait few days to get clarity on all cases.
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Correct, currency derivatives already offer some of the highest leverage by default. Any more leverage on top of it is a ticking time bomb to disaster.
Hi Nithin
As per the new rule we need 20% of margin to trade in equity.
I have few doubts
Suppose xyz company is trading at 100 per share.
And I have only 20k in my account
And as per the new rule I could buy 1000 shares
Now after I bought it in intraday
The price comes down to 99 per share
Will I be able to exit as it doesn’t meet the upfront margin because of loss
One thing not able to understand, why people complaining about removal of leverage for FnO not considering that leverage is STILL available for cash market.
Moreover, if one still wants to trade FnO, one has to add hedge to position and margins are reduced drastically under new margin rules which most of the retail traders can easily manage.
If SEBI is trying to reduce the risk that overlevraged naked positions have in the system, it is a move that needs a warm welcome.
Instead of simply blaming SEBI for its actions and portrying it as a retail killer, we must look at complete picture.
Should this not be considered as a positive sign that people will now be taking risk as per their capacity?
Also, why people are not recognising that FnO products are inherently leveraged? We must welcome the move that leverage on top of FnO margin is standardized across industry which is win win for everyone in long run.
Speaking of volumes, the hedged positions if implemented by everyone, should not reduce the volume in the market. As things remain more or less the same for hedged positions under new margin rules.
Instead, demand for hedges would create extra volume and revenue for the broker which in turn have a positive incentive towards reducing the leverage offered thus reducing risk for broker, client and overall system.
People must understand that main aim of trading should be reducing/managing the risk and not making profit. If risk is manged properly, profits will automatically come as by product.
At least, we are seeing some action to weed out the unwanted risk in system. This move needs a warm welcome as it is a try to make system better for everyone.
All this is my humble opinion.
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Does this apply to commodities also like Crudeoil?
Yes, this applies for all F&O (Equity, Currency, Commodities).
If Cash Segment and Futures market both will be providing same leverage of 5x will traders from FnO shift to cash segment there by bringing in more liquidity??
Yes, also there is a major tax benefit for trading in Cash market than in F&O for positional traders.
this 5x leverage is going to be in cash segment only not fno, also regarding fno traders shifting to cash segment… take for example of reliance futures which has lot size of 505, if you take position in futures you buy - sell this many shares in one go… doing this will not be easy in cash segment if you put market order it will execute at different prices and limit order will not give instant fill for 500 quantity.
What estimated effect these margin requirement changes r going to have on valuations of Index, Large caps & Medium caps ?
I basically buy BankNifty CE and PE for intra day trading. Do I need margins as well as per new margin changes? Please confirm.
No. Buying Options does not require margins, you only have to pay amount equal to Premium * Lot Size upfront.
One question, if one moves to hedged positions to get benefits under new margin rules to keep margins low, will Zerodha allow buying all index options or there will still be restrictions and one has to find broker that does allow buying of options without restrictions.
Asking because if playing straddle, the needed hedges will be far apart as premium collected will be much more especially in Banknifty.
One Bnf straddle will easily fetch 1000 points on Friday and in Zerodha, buying options 1000 points away from spot either side, generally is not possible because of restrictions.
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If you have already taken Short position, to hedge your position you can buy Options outside allowed range to the extent of quantity you have shorted.
Hello @ShubhS9 Just need a clarification as there is a discussion going on twitter regarding other brokers.
Suppose I take a position in futures in intraday with a capital of 5 lacs and square it off within an hour.
Will I be able to take another position with that 5 lacs again after squaring off the previous trade or else will the margin be blocked for whole day not allowing to take another trade with that 5 lacs?
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Ok
What happens under following scenario
I have 175000 in account and I open short straddle (collecting 818 points) at 29600 (current bnf value), as per margin calculator, 170000 + some change will be blocked.
Now, I buy 28800 PE and 30400 CE as hedges. Hedges are this far as I already collect around 800 points in straddle.
Range allowed by Zerodha for buying for the week is 29200 to 30000 PE/CE.
Now, as per margin calculator, my margin requirement for trade falls to around 50K.
Now, since I still have 120000 spare capital after satisfying the margin requirement, will system allow another iron fly with 50k already blocked and hedges under restriction?
Ideally, it should, right?
What should be done to utilise full capital?