Do you think even this workaround will work considering the enhancement in ELM margin on expiry day rule which they will also be implementing shortly?
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The ELM margin is a different story. You’d need to keep more margin for that. You can limit the margin needed to some extent by the workaround. That’s all.
Yes, ELM change combined with the extra cost of taking next week’s hedge would mean that it’d no longer be viable to hold the position on expiry day. As both will work towards reducing the ROI drastically.
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Hi, @nithin
Is it possible for the Metropolitan Stock Exchange to introduce a Weekly expiry with SXBANK (an index similar to BankNifty)?
Is there any talk or proposal by MSE?
Possible, but no member is really active on MSE.
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Will there be margin benefits on new extreme loss margin of 2% for hedged positions?
SEBI is considering allowing only accredited investors to do F&O trading. Accredited investors are high-net-worth individuals with at least Rs 5 crore liquid net worth and an annual gross worth of Rs 50 lakh. “That’s the way to protect retail and prevent them from going into F&O”
90% will be out …!
@tcpudpsocket you are mistaken in fact on many areas. PDT rule in the US does not apply to cash accounts. Cash accounts are allowed to trade European put and call credit spreads i.e. SPX, NDX, XSP etc. If PDT bothers you due to the 25k limit one can always trade the ES and the Emini and the Micro where PDT doesnt apply. Also allowing options to expire (worthless or in the money) PDT does not apply.
Further US has daily expiry on many indices. And nearly 50% of all option trades in the US are 0dte.
Nanny states dont work whether in some areas or all areas. Thats the reason US keeps innovating and nanny states keep flailing. Growth in India was finally triggered only by liberalization.
If rules are restrictive capital flies elsewhere. We have lost currency trading and now index options as well.
Why not shut down day trading on stocks as well? Or does retail lose money only in futures and options? Also did retail lose money in futures rather than in options? Eventually it will be the country’s loss as capital moves elsewhere.
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On Expiry Day ELM Margins increased by 2%, this makes total F&O Margin increased by 15-25%.
What will happen to carry forward short option positions carrying from one day before expiry (T-1).
Suppose on T-1 day, shorting 1 lot Nifty option has Margin Requirement of 1 Lakh. Now the position has been carried forward to expiry day, now on excpiry day ELM Margin increased So new Margin requirement would be say 1.20 Lakh, but client has only 1 lakh margin.
In that case what will happen to client’s position on T day???
Will Broker charge for Margin shortfall Penalty???
Same question…
Addition to that how a client will know what is going to be addional margin next day? In my case i had 4.5 margin available by 4 pm. But now in the morning shortfall of 1 lakh.
Earlier i was keep 5% free margin for these cases. But not helping now. Can zerodha upfront do this? I mean before expiry day block margin
The client can bring in funds before 9.15 AM or square off position once the market opens to avoid margin penalty.
What is the cutoff time to square off the positions to avoid penalty?
Hi @Meher_Smaran
Just curious to note that in current month expiry for NIFTY puts below 20800 are trading in strike interval of 1000, while a 1500 point OTM call is trading in strike interval of 50. Why is no trading happening between 20000 and 20800?
Thanks for your reply!
Hi @AV_2100 , apologies for the delayed response. I tried checking the exchange site for reference.
Nifty was around 22,120 on Feb 28 at 1:35 pm. The exchange keeps a specific band of strikes at 50 point intervals for near‐month contracts with open interest or meeting the mandatory listing criteria. This is why you will see a 1500 point OTM call (near 23,600) trading in 50 point intervals. It meets the criteria or has positions built up. You can refer here.
On the other hand, Nifty is at 22,120, the exchange initially lists puts in 50 point intervals 22,050, 22,000, 21,950… down to around 20,350. But if strikes like 20,800 have no open interest, the exchange can remove them.
Hence, the next active strike at 19,800, having a 1,000 point gap since all intervening strikes with no open interest are removed. Would suggest you read this: https://www.nseindia.com/products-services/equity-derivatives-nifty50