Hi Guys, I have been trading options for a while now and using sensibull for some virtual trades as well mostly long, I have a lot of question regarding actually executing long monthly index options, here it goes:
- I have seen a put spread involving strike price 16000 and 13000 and margin needed - 50,000 aprox in the sensibull app for september expiry, but does Zerodha allow to execute a 13000PE trade?
2)and lets say I want to square it off anytime before september will there be enough liquidity or I won’t be able to square it off?
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Will I require additional margin than the 50000 at the start to execute the trade and then selling or squaring it whenever?
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Is there a roll over scene for Nifty options as well or there is nothing like that when it comes to index options?
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Whats an ideal strategy when it comes to options holding for months, is spread better or naked option buy/sell better?
Thanks
If the long option position is outside the allowed range then first you will have to take short position and then long position. We allow buying options at any strike price for hedging purposes if you hold a short option position.
To take the short position first, you will need full margins, as margin benefit is available only after long position is taken.
Liquidity in far expiry options will generally be low.
Margin requirements can vary depending on price and volatility. It’s best to have some buffer, 5 to 10%.
Rollover is essentially closing position in current expiry and taking fresh position in further month expiry. You can do this for index options as well. You can learn more here.
Holding hedged positions is much better than naked positions. With hedged position your max loss is capped and margin requirements are also less.
Would suggest you read this module on Varsity for better understanding about Options:
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