Yes… This could actually be it!!!
Go home cash traders… this is not for you… 
LET THERE BE LIGHT!!! LOLOL
THE DARK AGE HAS PASSED… 
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If you are asking that question… may be you’re not an options trader…
Ask any professional options trader and you will get your answer.
I am not an Options trader, but I am hoping to be one in the future when I have enough capital, so can you please explain to me what the situation was in the past and what this means for the future?
Thanks in advance
It is very difficult to explain if you are not an options trader…
But for the sake of brevity…
Earlier… If your maximum possible loss was 100 rupees for a ‘spread’ trade, 400 to 500 rupees were blocked from your account balance to make the trade… (Sometimes it is like 1000 to 2000 is blocked… in the name of margin… WHICH IS TOTALLY ABSURD)
Now the question to ask is… When the maximum possible loss is just 100 rupees(NO MATTER what happens to the market…)… what is the need to block THE EXTRA 1000 to 2000 rupees… in the name of margin.
Now… This will change (well… it is “expected” to …) If the max loss is 300, may be 350 or 400 will be blocked as margin…
This SAD situation is ONLY in India… Outside India… everybody is enjoying the benefit of less margin blockage for “hedged spread trades”.
We took more than 2 decades to ‘EVEN CONSIDER THE PROPOSAL for REDUCING MARGINS’…
Speaks volumes…
Ok, I get the picture. So this means if this proposal goes through then for people who are not trading naked options less margin will be sufficient.
That means if I want to deploy something like an Iron Condor on Banknifty weekly options, I don’t have to pay up 2 lakhs as margin. Is that correct?
This will be quite straightforward to implement. Just the values of sigma, lambda, SOMC (short option margin), Price scan range (PSR), etc will change. All RMS systems of brokers will easily adapt to this.
But you maybe need to temper your expectations in terms of margin benefits. I think it will be lower by around 65% from current levels. So if margin required today for a vertical spread is 1lk, it will drop to maybe around 30k. This is required to cover for execution risk.
So say we are shorting 12300 calls and buying 12400 calls
The max loss on this is 70 points or around say Rs 6000. Currently the margin required is
This Rs 90k required will drop down to maybe around Rs 25k. It won’t become 7k. The reason like I have explained earlier, if the client exits the buy options first, then suddenly you end up holding short positions with unlimited risk and hardly any money.
But yeah, let’s see. 
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we can make the margin required to 7k , instead of 25k , as u said .
we can patch-it up this risk with a simple mandatory condition i.e . the trader can’t exit the one position at a time . If the trader wants to exit , he compulsorily has to exit both the positions simultaneously !!!
is the above thing possible ? so that the traders can enjoy margin benefit in the hedge positions !
Just because margin is less, it won’t magically make profits… Bigger the position size with a fixed capital, higher chance to lose.
With reduced margin and bigger position size if we are hitting max loss twice or thrice consecutively on spreads too, it will be considerable portion of capital eroded…
Also I doubt if it’s beneficial for zerodha since they charge flat 20 per order.
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Or maybe Zerodha can introduce basket order facility, so when trader wants to enter hedged trade he creates a basket of than particular strategy so his/her strategy will be executed at the same time and the same when squaring off.
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We as Zerodha can build this out fast, but the entire broking community in India will have to build this. It will all take time. But this is a good start, eventually I think the margins will go much lower.
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I’m sure there’s lot of expectations @nithin
Please do the best for your trading family.
As long as the broker system is not impacted by risk, it should be win-win.
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@the_rock, @HSL and all others who are in favour of below:
OR
I have no clue how experience TRADER you are.
As in OPTION Strategy we have to adjust our position you can’t Mandatory to Exit one of the above condition suggest by you.
when the new margin system implemented , with in 3 to 4 month we can see a good liquidity improvement in all f&o stocks , liquidity will improve in fast manner in indian market , like USA you can find enough volume in all option contract , even next month and far month ,
Its really a good move , but india is too late to follow the developed market
any way happy to see the indian market with new margin system
This kind of rules is very good for brokers , traders and government
No more UNLIMTED LOSS
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Margins won’t change for naked positions, it may go up slightly. This intraday leverage issue is a separate one, we need to wait and watch if regulators will allow it to to be continued or it will be stopped.
Check this thread
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So we have this technology that know we have two options for risk exposure? This is cool!
@nithin, any particular reason for this? I know they carry unlimited risks but depending on your strategy, naked options/futures aren’t a bad thing. Margins have in any case increased a lot in the last few years. At least, I hope that the margins for far OTM options will remain untouched.
@nithin interesting… so with the short option minimum reducing, far OTM options should need lesser margins too I am assuming.
Likely yes.
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