Hello,
When we buy futures contract for few days we are required to pay initial and span margin. Below is my query regarding the same.
Let’s say I buy 1 lot (500) of HDFC at 1800 and the closing price is 1790. Therefore, at the close I’m in a loss of Rs 5,000.
In this case will Rs 5,000 will be deducted from the initial and span margins or additional 5,000 will be deducted from my account?
Regards.
Can you please tag the question under the right category?
What you pay as normal margin will be fixed when you enter a carry trade and it will be released back into your account when you close the trade. The loss of 5000 will be deducted from the free cash in your account. If there is a shortfall of funds in your account, then this will eat up into your exposure margin and there will be a shortfall in your margin oblgation to the exchange. A penalty will be charged for the margin shortfall amount.