Maybe 20-30% increase in overall margin for call spread strategy
Ok so in short these new changes will not affect the movement right? We need not to worry about the movement is it?
Movement only depends on buyers and sellers anticipations not on lot size increase or margin increase
Did you read the SEBI circular? Clause 5.1 states: “Options prices move in a non-linear way and carry very high implicit leverage. These are timed contracts with the possibility of fast-paced price appreciation or depreciation. In order to avoid any undue intraday leverage to the end-client, and to discourage any practice of allowing any positions beyond the collateral at the end-client level, it has been decided to mandate collection of options premium upfront from option buyers by the Trading Member ™/ Clearing Member (CM).”
So, the whole issue is not about market movement. And why should SEBI try to control market movement? If they do, SEBI themselves will be liable for market manipulation. 
nthng wl change … this is a tiny move fr big institutions who r behind big n fast mvemnt in nifty/bn … in my opinion, both indexes mvemnt wnt b impacted even by a tiny fraction
One big issue I can foresee is that the minimum capital required now is higher, so there will be small traders who will take loans or borrowed money and continue gambling and lose more than they ever did before. Because, gambling is very addictive. So, no regulation is going to stop it.
So basically sebi is saying bring bigger chips if you want to sit at the table.
What about a Reverse Calendar spread [sell far week, buy near week]? Will this change affect it as well?
whats is calendar spread treatment?
buying future/synth fut and selling weekly contract also comes under calendar right? what about hedging future position with weekly contract?
This update going to destroy so many strategies. being a secondary advisory committee how u guys missed to explain it to SEBI.
Currently there is no restrictions in buying option on expiry day. I can buy 1st and then sell my sell strike. Will this change?
I’m clear about most of the points but not clear about this one. The current nifty straddle requires 85k margin. Lot sizes will obviously increase. But suppose everything is the same and the 2% ELM rule was implemented today and it also happened to be an expiry day, then how much more would I have to pay above 85k. Will it be 2% extra on 85k or on the whole contract?
will be on the whole contract i think
These SEBI guys are totally confused what they are doing
SEBI should have put in eligibility rules example you have x netwroth etc etc or family bg etc etc rather than completely cutting off weekly expiry.
They new rules are like if your toddler pisses on your leg instead of changing the toddlers diaper you cut off your own leg the one he pissed on so that he dosent piss on your leg again.
absolute retarded move by sebi
Shld be 2% of contract value
It won’t matter which is a buy leg and which is a sell leg. If any leg is going to expire on a particular trading day, you will not get the margin benefit on that day. The two legs will essentially be treated as independent trades.
One way to lower the margin for calendar spreads on expiry day is take opposite position (buy) far OTM against the expiring leg 1 day before expiry before market close.
Of course it will need some additional cost, but at least you can lower the margin on expiry day.
For reverse calendar spread, you’d need to buy OTM leg expiring in the next week which balances the short leg. If you don’t do this you could get a margin call. This may sound complicated. But, if you’ve been trading frequently, you’d probably understand the workaround.
The Extreme Loss Margin (ELM) if charged on contract value (Strike Price * Lot size), not on SPAN + Exposure margin.
Say you have a short position in Nifty 27,000 call option expiring on 30th October with margin requirement of Rs. 1 lakhs. On the expiry day of this option you will have to maintain an additional 2%.
So you will need additional margin of Rs. 12,500 (25000 Strike price * 25 Lot size * 2% / 100) on expiry day.
True
That is even more retarded
That is even more retarded
How ? you do realize Those who can afford to risk should be allowed to upto limits example your net worth is 3 or 5 cr you can afford to loose 1 or 2 lakh a year for example rather than blocking options completely and banning weekly expiry someone like this should be allowed to trade with 90 or 150 quantity weekly. Or lets say you work in tech/stem or finance or are a Sarkari babu if you loose 1 or 2 lp in a year that much in a year you can makeup that much back within 15 days due to high salaries and perks
whereas, those who have nothing and cant afford to risk loosing 1 or 2 lakh a year due to bad trade,freak trade etc should not be allowed to as their net worth will become zero. All these YouTubers are the reason every tom dick and harry irrespective of financial backing etc got into option trading to amke quick money and now everyone is banned from trading or has their instruments taken away.