Short penalty: Is the total margin required for NRML positions in FNO different from actual margin blocked by the broker?

I had taken short strangle in BNF monthly expiry options. Utilised maximum available limit. However, I was charged short penalty. Reason, reqd margin was greater than available capital. When I questioned the broker how was I allowed to take the trades beyond my capital, they said the margin blocked will not be the same and they receive actual margin requirement from exchange at EOD. IS this true and valid?

Could you please provide more details?

  1. Was there unrealized loss and so more margin needed to be blocked?
  2. Was the additional margin needed due to it being near expiry?

Edit: I suppose this is a required margin shortage scenario. Required margin is what will be required to place all the orders, otherwise order shouldn’t have gone through? @ShubhS9

There was no unrealized loss.
Trades were taken on 28th April, expiry on 29th April

Is there were a way to verify required margin from the exchange?

Right, if you don’t have sufficient margins to place the order, it’ll be rejected.

You can easily check the margin requirements here.

Yet again, the broker claims that the margin requirement is different from what is blocked or what is calculated from the margin calculator. And they receive the margin files from exchange by EOD.

What is your broker’s name ?

Alice BLue

Bro why are you with a sub standard broker when the best is available here in Zerodha ?

This is nothing to do with broker.

Even zerodha updates the margin end of the day.

Let me explain with the example. Lets say you have 1Lac in your account, and you have taken F&O position for say “99K” ( at 2-3PM).

Now sudden volatility in the market and the margin requirement increase, so the updated margin will come after market close, Say 5PM.

Now updated margin is 1.05 Lac, then you are short of 5K, which will be resulted in penalty .

That;s why brokers say, keep buffer of 10% capital. so in above case take only position till 90K .

I’m trading brokerage free. They had some 10 year brokerage free plan for 15k couple of years ago. Platform is also a bit decent.

Understood. Thanks a lot! :slight_smile:

Ok, understood why you are trading with them but you should know that nothing is really free in the world of business. They always try to take money from our pockets in some way or the other.