I am guessing most of you have read the 20th march 2020 circular or heard about it in the news. If not, check this
My view
SEBI’s regulatory measures on F&O are being misinterpreted by many people, I think. Index F&O — you can trade up to 500Cr of positions freely. Above that you need to either have stocks worth notional value of the contract to short, or cash to go long. Won’t affect most people.Will definitely affect large traders/prop & institutions.
Stock F&O - Currently 121 of 144 contracts are at less than 30% of MWPL(max OI) allowed. Check last column https://zerodha.com/margin-calculator/Futures/…. The remaining have risk of getting into ban when no new positions but only exits allowed
Update 22nd March.
For index F&O it is Rs 500 crores separately for Futures and for options, also on a net basis. More here
All these… upto 500 Cr limit per trader/ broker is subjected to overall ceiling in OI which is being reduced by 50%. Large players cant trade as much as they were doing… IV on options / future premium-discount will go very high… When panicked traders face illiquid markets… things will get ugly very quickly…a situation SEBI wants to avoid…
the recent SEBI margin rules for controlling volatility in market because of coronavirus at one point says in respect to index derivatives that
a. Short positions in index derivatives (short futures, short calls and long
puts) shall not exceed (in notional value) the Mutual Funds’ / FPIs’ /
Trading Members’ (Proprietary) / Clients’ holding of stocks.
b. Long positions in index derivatives (long futures, long calls and short
puts) shall not exceed (in notional value) the Mutual Funds’ / FPIs’
holding of cash, government securities, T-Bills and similar instruments.
So does this mean that if I want to buy a call option or put option in banknifty of 22000 strike whose current premium is valued at Rs. 100 then I must have an equivalent amount of 22,00,000 in cash in my trading account? How exactly is it going to affect me?
Also with respect to cash margin for intraday, how much of leverage in BO/CO will be provided for long or short of stocks (FnO stocks) in cash market by zerodha? Please help
If someone is holding on to yes bank 30 PUT OPTION in zerodha…
How does this affect me as regards the sebi circular…
Will i be allowed to trade in my existing position or once i sell i wont be allowed to buy it back as its under physical settlement…Kindly advise @nithin
On last wednesday and thursday of expiry week we don’t allow fresh buy in options in current expiry, one can short but margins will be increased. Also look like yesbank went under ban from monday.
can you explain it with an example how much cash as notional value we need to maintain if we want to do a long put trade on banknifty options in say 22000 strike?
Nithin already clarified you above, for 500 cr of your position size, nothing will be effected so you need not to worry unless you have above 500cr portfolio.
What will happen to stocks like yes bank which are already trading way above the MWPL of 50%…Will they be under ban from monday onwards ??? And if yes will it have a positive or negative impact on the stock… @nithin@siva
Notional value = Banknifty lot 20 * 20317 = 406,340 Notional value of Banknifty future contract
As per the sebi circular you can trade upto 500 crore of position freely. With notional value wise
Sir but SEBI circular 3(ii) states further to 3(i)… I mean I have 0 shares held on my demat and I am a pure index trader. Does the circular mean I cannot buy even 1 lot of the deepest OTM call or put? Or till 500 crores of rupees value I can create fresh index positions? Please clarify. Thanks & Regards.
On a side note, since there are calls for ban on trading till normalcy returns, in case govt takes a call to ban trading…can you please let us know what would be the efffect on futures and options which are due expiry this month…
Andin case we have hedge positions in futures between current month expiry and next month expiry…what would be the effect on the overall trade if ban prevents us to exit the trade.
No clue what will happen to existing positions in case sebi opts for complete ban. Likely complete ban may not happen but anything is possible in the current environment.