# SPAN margin for a hedged postion
**URL:** https://tradingqna.com/t/span-margin-for-a-hedged-postion/241
**Category:** General
**Created:** [March 31, 2014, 4:37pm UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241 "2014-03-31T16:37:39Z")
**Posts on this page:** 6
**Page:** 2
### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [January 16, 2022, 12:17pm UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/23 "2022-01-16T12:17:48Z")
> [@Alpha\_AA](#):
>
> In case of hedged position Long Futures NRML hedged with Long Put ITM Option NRML – if the price starts falling freakingly so I will be covered by Long Put ITM Option NRML however to recover some more loss if I Short Call OTM Option in **intraday** not NRML - will it nullify the Long Put ITM NRML and my Long Futures NRML will become naked and hence the margin requirement will shoot up or this will not happen, or intraday will not affect the NRML hedged pair?
This won’t break the hedge as your position is in MIS. Though, you will require full SPAN + Exposure margins to take a short position.
> [@Alpha\_AA](#):
>
> Long Put ITM Option NRML was 1st row and Long Futures NRML was 2nd row at the time of entry - so which leg order was executed first during position making, doesnt have any issues on the physical net off, this still holds good?
No, it doesn’t matter in which order the orders were executed. Your positions will be netted-off.
> [@Alpha\_AA](#):
>
> Whenever in any hedged position like Long Futures NRML with Long Put ITM Option NRML if we buy another Long Put ITM Option NRML and then sell the old one, will not sell till the new option is bought, will this also shoot up any margin for few minutes or no affect will happen as for few minute Long Futures will be over hedged only, please advise?
This won’t increase the margin requirements as hedge is already in the place.
> [@Alpha\_AA](#):
>
> Whenever in any hedged position like Long Futures NRML with Long Put ITM Option NRML if we buy another Long Put ITM Option NRML and then sell the old one, the funds released by selling the old Long Put ITM Option NRML comes immediately and 100% to trading account and they can be used for same day any Intrday F&O / CNC and for Overnight F&O / CNC, please advise?
Funds received from selling options can only be used for buying options on T-Day. For all other purposes you will be able to use the funds from T+1 day.
> [@Alpha\_AA](#):
>
> M2M of Futures gets in the trading account funds same T day by end of day , meaning before next day market opening and then they can be used for Intraday and overnigth for both F&O and CNC?
Right. MTM profit from Futures position will be credited to your account on T+1 day and you can use it for any purposes.
> [@Alpha\_AA](#):
>
> If we dont use Basket Order and first buy the Long Put ITM Option NRML same stock same month expiry via GTT or manual and then second we buy Long Futures NRML same stock same month expiry via GTT or manual will the margin reduction benefit be available for Long Futures NRML or its available only in Basket Order?
Yes, it doesn’t matter how you take the position, you will get the margin benefits.
> [@Alpha\_AA](#):
>
> What happens in case of CTM 3 strikes rule - Call Options will become CTM which are 3 strikes below the expiry day stock price and 3 strikes above the final stock price as CTM Put Options. will they be also liable for physical settlement Long (call or put) and Short (call or put) positions both?
NSE has discontinued DNE (Do Not Exercise) facility for CTM contracts. So these contracts too are compulsorily physically settled.
---
### Author:  [@Alpha\_AA](https://tradingqna.com/u/Alpha_AA)
#### Post date: [March 31, 2022, 11:09am UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/24 "2022-03-31T11:09:58Z")
@ShubhS9
Please advise apart from ITM options getting cash settled in indexes (BankNifty, Nifty) and delivery settled in stock, a) what does CTM Close To Money options mean with any made up example for index and stock b) what does this CTM will do , will they be treated as ITM and cash settled for index and delivery settled for stocks ,if they are like ITM why this separate name CTM is there any difference between CTM and ITM?
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### Author:  [@Alpha\_AA](https://tradingqna.com/u/Alpha_AA)
#### Post date: [June 22, 2022, 8:43pm UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/25 "2022-06-22T20:43:42Z")
@ShubhS9 Hi Shubh please advise
1. In Zerodha MCX Curdeoil trading the zerodha margin calculator shows the hedge benefit when trading for example 1 lot Long crudeoil future + 1 lot Long Crudeoil Put- but the same is not shown in the basket margin requirement (like its shown in equity options)
2. Can you please advise in MCX crudeoil the expiry is how many days before the mentioned date on the contract for future and option like Expiry minus 2 days or Expiry minus 3 days and b) how many days before that actual day of expiry E-2 or E-3 Zerodha increases the margin for Future, Option Sell or Option Buy position
3. on expiry all options before ATM will become zero in crude oil?
4. Is there CTM concept in crudeoil like 3 ITM strikes from ATM will be also taken as worthless?
5. If any option long or short expires ITM or future is not squared off then its cash settled and automatically the net profit and loss will get adjusted (is it advisable if one is in profit to let it expire especially in crude oil)
6. Zerodha Margin calculator on website shows significant reduction in margin in case of crudeoil on MCX Future hedged with option buy but same doesn’t reflect in basket order margin requirement?
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### Author:  [@Shiva\_ms](https://tradingqna.com/u/Shiva_ms)
#### Post date: [June 23, 2022, 2:29am UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/26 "2022-06-23T02:29:11Z")
Hi @Alpha_AA
> 1. Can you please advise in MCX crudeoil the expiry is how many days before the mentioned date on the contract for future and option like Expiry minus 2 days or Expiry minus 3 days and b) how many days before that actual day of expiry E-2 or E-3 Zerodha increases the margin for Future, Option Sell or Option Buy position
a. For crude oil future & options contracts, we don’t square off till the expiry date if you are maintaining sufficient margins.
b. for crudeoil futures the tender period margin is increased 5 trading days prior to expiry day [click here](https://support.zerodha.com/category/trading-and-markets/margins/margin-leverage-and-product-and-order-types/articles/additional-margin-crude-oil-natural-gas)
> 1. on expiry all options before ATM will become zero in crude oil?
yes
> 1. Is there CTM concept in crudeoil like 3 ITM strikes from ATM will be also taken as worthless?
No
> 5.a. If any option long or short expires ITM or future is not squared off then its cash settled and automatically the net profit and loss will get adjusted
> b. is it advisable if one is in profit to let it expire especially in crude oil
a. yes, the crude oil contracts are cash-settled. The P&L will be updated on the ledger.
b. 🤐
---
### Author:  [@Alpha\_AA](https://tradingqna.com/u/Alpha_AA)
#### Post date: [April 7, 2023, 8:16am UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/27 "2023-04-07T08:16:28Z")
@ShubhS9 / Zerodha team / @Shiva_ms - need one advice, since now stocks settlement is T+1 day
Q1)- while buying any new stocks for overnight delivery- how much approx % funds is needed on this T day of buying and balance amount one can deposit in how many days – is it T+1 day morning before 3pm or by T+1 day end of day before 11pm
Q2) Stocks settled and in demat- —\> If we sell holding stocks which are already in demat-- T day -80% funds available from selling on T day can be used to take same T day new stocks delivery overnight or F&O positions overnight or only allowed for intraday trades, and if its only intraday - \> is there a penalty if delivery overnight is taken on this T day for new stocks or F&O positions overnight
Q3) Stocks in transit and is T+1 day —\> If we sell these stocks which are in transit on T+1 day which have yet to come to demat on T+1 end of day-- approx how much % of funds will be available from selling on T+1 day morning and can it be used to take same T+1 day new stocks delivery overnight or F&O positions overnight or only allowed for intraday trades, and if its only intraday - \> is there a penalty if delivery overnight is taken on this T+1 day for new stocks or F&O positions overnight
Q4) Squaring off intraday or old overnight position-\> option sell position CEorPE / Futures Long/Short position- all funds released can be used to do anything - new stocks delivery, new F&O positions overnight, intraday-- is this right , please confirm?
Q5) Squaring off option buy position CE or PE **intraday** - all funds(original amount + profit) released can be used to do anything as its intraday option buying , also original amount and not the profit can be used to anything or its also not allowed (anything means = new stocks delivery overnight, new F&O positions overnight), – please confirm? if not then is there a penalty if delivery overnight is taken on this T day for new stocks or F&O positions overnight
Q6 ) Squaring off option buy position CE or PE **old carried forward overnight position** - all funds(original amount + profit) released can be used to do anything , also original amount and not the profit can be used to anything or its also not allowed (anything means = new stocks delivery overnight, new F&O positions overnight), – please confirm? if not then is there a penalty if delivery overnight is taken on this T day for new stocks or F&O positions overnight
---
### Author:  [@ShubhS9](https://tradingqna.com/u/ShubhS9)
#### Post date: [April 7, 2023, 11:30am UTC](https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/28 "2023-04-07T11:30:32Z")
> [@Alpha\_AA](#):
>
> Q1)- while buying any new stocks for overnight delivery- how much approx % funds is needed on this T day of buying and balance amount one can deposit in how many days – is it T+1 day morning before 3pm or by T+1 day end of day before 11pm
For buying stocks for delivery, you will need the full amount ie. price \* quantity.
> [@Alpha\_AA](#):
>
> Q2) Stocks settled and in demat- —\> If we sell holding stocks which are already in demat-- T day -80% funds available from selling on T day can be used to take same T day new stocks delivery overnight or F&O positions overnight or only allowed for intraday trades, and if its only intraday - \> is there a penalty if delivery overnight is taken on this T day for new stocks or F&O positions overnight
You can use the proceeds received for delivery trades as well both for equity and F&O.
> [@Alpha\_AA](#):
>
> Q3) Stocks in transit and is T+1 day —\> If we sell these stocks which are in transit on T+1 day which have yet to come to demat on T+1 end of day-- approx how much % of funds will be available from selling on T+1 day morning and can it be used to take same T+1 day new stocks delivery overnight or F&O positions overnight or only allowed for intraday trades, and if its only intraday - \> is there a penalty if delivery overnight is taken on this T+1 day for new stocks or F&O positions overnight
80% of the sell value of the proceeds from selling T1 holdings (stocks bought the previous day and yet to be credited to the demat) can be used to buy new stocks for delivery. However, only 60% of this selling value can be used towards F&O. To learn more, see: [Update 4th Aug 2020 - Margins for trading stocks & Intraday leverages](https://tradingqna.com/t/update-4th-aug-2020-margins-for-trading-stocks-intraday-leverages/86511)
> [@Alpha\_AA](#):
>
> Q4) Squaring off intraday or old overnight position-\> option sell position CEorPE / Futures Long/Short position- all funds released can be used to do anything - new stocks delivery, new F&O positions overnight, intraday-- is this right , please confirm?
Yes, this is right. However, any intraday profit you make will be available only on T+1 day.
> [@Alpha\_AA](#):
>
> Q5) Squaring off option buy position CE or PE **intraday** - all funds(original amount + profit) released can be used to do anything as its intraday option buying , also original amount and not the profit can be used to anything or its also not allowed (anything means = new stocks delivery overnight, new F&O positions overnight), – please confirm? if not then is there a penalty if delivery overnight is taken on this T day for new stocks or F&O positions overnight
Initial capital will be available for trading in any segment. The intraday profit however will be available only on T+1 day.
> [@Alpha\_AA](#):
>
> Q6 ) Squaring off option buy position CE or PE **old carried forward overnight position** - all funds(original amount + profit) released can be used to do anything , also original amount and not the profit can be used to anything or its also not allowed (anything means = new stocks delivery overnight, new F&O positions overnight), – please confirm? if not then is there a penalty if delivery overnight is taken on this T day for new stocks or F&O positions overnight
No, the premium received from selling option can only be used for buying options on the same day. It can be used for all other purposes from T+1 day.
You can also read this article for more details:
> **[What changes due to the new upfront margin requirements?](https://support.zerodha.com/category/trading-and-markets/margins/margin-leverage-and-product-and-order-types/articles/upfront-margin-requirements)**
>
> What changes due to the new upfront margin requirements?
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