If I write/short sell any option say 2 lots 29 May CE 7500 at Rs.75 and nifty rises 200 points then premium may rise to Rs.150. So I lose (100 * 75) = 7500. Now I wanted to know apart from this loss are there any other kind of risks involved in option writing where I can lose money. If not then why approx. 45000 is blocked as margin for short selling 2 lots.
Hi Arjit…if Nifty moves to 7700 from 7500 then the minimum option premium for a 7500CE would be 200… Add to this the volatility and time premium that would be another easy 50-60 points. So the Option price would be at least 250. Which translates to a loss of at least 25K…deduct from this the credit you have received which is 7.5K and your loss would be 17.5K
Right now the margins across all brokerages and across all leveraged instruments are high because of elections.
profit limited . loss unlimited. for more details
Derivatives Market (Dealers) Module (DMDM