There is NO MTM daily settlement for NSE Option Shorting!

General
1

Very basic query and we had a big argument because of this yesterday but nobody concluded.
I want the resident option players/traders here to conclude this.

There is NO MTM SETTLEMENT in NSE OPTIONS be it index or stock options for shorting.
Only thing broker will do is block extra margin or release the surplus margin.

I have done option selling countless number of times and i can bet my house and kid on this :grinning:
And even now i am carrying a short postion in COALINDIA call.

PS:
@Tradingqna delete this topic if i am wrong ( 110% sure that i am not )
@Spaceship Lets talk only about the topic in hand and be civil :zipper_mouth_face:.

2

Correct…no MTM in shorting of options in daily settlement… only margin is adjusted

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3

Instead of having that long argument why dont you ppl jst googled such a basic querry…

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4

dont want to get into that argument again bro…
i play in options and i know this is a very basic thing to know …

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5

Daily settlement happens for option writing. This is done to reduce risk of default.
https://www.nseindia.com/products/content/derivatives/equities/settlement_mechanism.htm

dumbass proof

6

nah… we are talking about MTM ( daily mark to market ) settlement , check the atatched image …

premium settlement is straight forward… we buy option , premium money is deducted… we sell option , premium amount is credited to our trading account…
as far as i know all brokers will let us use the premium marging received immediately …

Let me put it clearly for writing options.
Assume i have 5L margin in account and i am writing 10 lots of INFY 1000 CE for 5Rs… 25,000Rs will be credited to my trading account
Until i square of my INFY CE position , i will have 5.25L in my trading account .
But blocked margin will vary.

image

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7

Your F&O obligation amount(Daily M2M amount) consists only of your daily futures profit/loss and your options premium credit/debit.

When you short an option, the premium you receive after shorting is the maximum profit you can make on that position and the premium is immediately credited to your account when you short an option. This received premium will show in your daily M2M as a credit on the day of shorting.

When you short an option, a span and exposure margin is blocked for this position. You have to ensure that the entire margin is available at all times. If your short position leads to a loss in premium, as in the option price goes up, then you need to have the required funds to cover this loss. Otherwise, it will eat into your exposure margin and a margin penalty will be levied for the shortfall. If your options loss enters your span margin and you don’t have sifficient funds in your account, then your options position will be squared off.

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