Hello everyone. I understand that I can pledge my shares and use the margin obtained for trading in derivatives. I also understand that it cannot be used to buy shares. It is also mentioned by Nithin Ji in one of his posts that SEBI mandates that I should maintain 50% of the margin required for the position in the derivatives. My doubt is if interest is charged on the amount that is brought in by way of pledging shares. I will follow the other conditions like maintaining 50% cash margin etc. Please reply as soon as possible.
If you have 50% cash, there is no interest.
Check this post
I find it difficult to check what portion of the balance is due to pledging and what portion of the available balance is cash. As you mentioned that interest will accrue in case the 50% cash margin is not maintained, I am worried if I will be charged with interest. Is there any way or alert that enables me to see whether I need to add cash to my account? Please reply soon.
@lakshmihv You can find the cash margin and collateral margin available in Kite under the funds page. The Total Account Value shows your cash balance, Collateral is the margin received from pledged holdings, and Margin available is the sum of account value and collateral.
We are working on showing the collateral margin available in our new back-office, Console. Currently, to check if you’ve utilized excess margin, you can simply check your withdrawable balance in Console under funds. If the withdrawable balance is in debit then you’ll have to add more funds to your account. Alternatively, you can check your ledger to know if you’ve utilized excess margin.
Thank you very much. I think this is unknown even to your support staff who called this evening to clarify the ticket.
Can I pledge my shares which are in circuit 5% or 2%…
Collateral is provided only on certain approved list of securities. You can find the list here.
Hello @nithin Sir
Is there a way in which traders can earn fixed income by pledging collateral?
Hmm… not really. You could try covered calls. Which is pledge your portfolio and use the margin to write calls on those contracts. But the issue is that if the price bounces higher than your call strike, you will not make money on your portfolio. Check this
Check this on what call writing is about
And this on covered calls
Thank you Sir