If I pledge my stock holdings for Collertal margin, can I trade options with hedging for intraday only?
yes you can
As option buying is not allowed in colletral margin… in case of hedging can I do it?
can you explain with an example what trade are you planning to do?
You can use collateral to trade futures, sell options and trade in intraday equity only. You cannot buy options with it.
Suppose my view is bearish and Bank Nifty is in 34700 and I want to sell OTM option with Deep OTM hedge…
Ex:- Sell 35000 CE
Buy 36000 CE
Can I place this trade with colletral margin?
Yes it will work
Your buy side has to come from cash and not collateral.
Since its a debit spread, the order will work even without cash - intraday. However to take the position overnight a 50: 50 cash: equity collateral has to be maintained (ledger balance can be zero)
Ok Thank you guys …. Really appreciate it
I think you meant credit spread
Writing 35000CE premium collected is “more” cash, and that cash on same day can be used to buy 36000CE “less” cash
yeah my bad, its credit spread.
you will get the amount to your ledger EOD hence no cash balance required.
for debit spread, you might have to maintain balance or risk DPC