For example I created a spread to hedge by buying OTM call but if I remove this hedge by selling it …close to expiry (because there is no value left in it and 90% chances that it will expire worthless - as only 4 days left and its way OTM) …what will happen to margin requirement for that remaining naked short position?
I know it will go up but — lets say I don’t have enough margin in the account that it will require if I remove hedge - so it will not allow me to remove hedge or it will go for margin penalty ? because on that day at least I did not have enough margin required ? Can I put more money for required margin same day (after removing hedge) before market close to avoid penalty? @ShubhS9@sensibull Also by chance I forgot to put more money same day - can I put more money next day to avoid penalty?
The margin requirment will shoot up for naked short position.
You can remove the hedge, once removed if you don’t have adequate funds in your account you will receive margin shortfall message, if you don’t bring required funds your position might be squared off by RMS. Also, if one side is closed after 3 PM or if there is too much volatility in the market there is a chance RMS might not be able to square-off, In case the position is carry forwarded penalty will be charged and the onus is on the client itself.
So if I don’t have enough funds in AC …I will receive margin shortfall message immediately (within how much time?) and after I receive message how much time I have to transfer funds via IMPS - before RMS will decide to square off?