Update 4th Aug 2020 - Margins for trading stocks & Intraday leverages

i am seeing option sellers buying far otm ie 500 point away of nifty buying to hedge the postion y this injustice
i usually try to buy hedge 100 point away and i have to pay same margin as them even though my risk is very less for 70 point risk i have to pay huge margin if admin are seeing this pls inform sebi and tell them to make risk based or problems will start to arise

With the new margin rules in effect fully from 2021, the margin benefit we get on hedged option positions or multi-leg option strategies, will it go away as well? For ex, I expect Banknifty to expire around 25000 and I short 24500 PE and 25500 CE. In the current system I get significant margin benefits to execute these trades. Would this change? If yes, by how much will it change?

There will be no change in this, you will continue to get margin benefits for hedged positions as you are getting now.

@siva Hope 40k margin is sufficient for Banknifty Short Straddle for intraday till feb 2021 end. Please confirm.

For intraday? or to carry forward?

My query is for intraday.

Yeah, should be okay.

@siva Thanks for your confirmation!!

@siva : Hi, I still don’t see additional stocks being added for pledge margin in your latest sheet.
Can you update where we are on this please.
WIth intraday leverage going to be reduced in the near future, one needs to utilise full extent of stocks available in demat to gain additional margin to mitigate the reduced leverage. Thanks

Which stocks you are not seeing? with what you are comparing?

@siva, i had few MFs where few variants are available but their DIRECT or GROWTH variants are not available
eg. Nippon India Money Market Fund Direct Growth, SBI Magnum GILT Direct Growth, etc

@siva, I totally agree with @vmm… If one MF scheme is allowed, can their DIRECT and GROWTH variants be added, especially when the regular variants are allowed… Most people on Zerodha platform would prefer the DIRECT variants over REGULAR variants

SEBI circular says all stocks, except the ones which are illiquid, can be pledged for margin.
The number of stocks (not including MFs, liquid funds, etc) currently available for pledge at Zerodha is around 750ish which is similar to last months number. This number should increase to include all stocks except the ones which are illiquid. I am sure you would agree this number will be much higher than 750.

are this new rules applicable from yesterday…or postponed? @ShubhS9

Changes have already come into effect from September 1st, Read the following post to know the changes.

Shubh sir you said on selling 24500 CE and 25500 PE margin benefit of hedge will be there, but my question is before the strangle is created first 24500 CE needs to be sold, without intraday margin how will it be possible to sell CE first? Will it not be seen as a naked position before PE of other strike is sold? Please answer sir am very confused.

Yes, it will be naked position and you will need sufficient funds in your account to take Short position first, after you take position in other Strike, you will get margin benefit.

@siva : would appreciate your response on this.

The number is much more than 750, you can check the list.

@siva : I am checking this sheet - screenshot below.
The total # of stocks (excluding MFs/ETF) that can be pledged is around 750.
Are you refering to some other sheet?