we need to pledge because we can trade only hedged positions its will be an extra returns , blindly i will not trade .
see for example covered call , any other margin requirment extra we can pledge these securities to manage the broker requirment , there is no loss are to manage the position i need to pledge these securities
@nithin thanks for sharing this, but we can’t expect retailers to go into option selling with limited capital and with adverse risk reward ratio. How much ever we hedge in options a 10% move can wipeout the account. In futures we trade only intraday with CO/BO, i first fix my loss then look for target price and keep trailing stop losses. Options selling or even buying is not for everyone. SEBI forcing many into it. And coming to US markets they only pay 12.5% of margin required for carrying forward of positions to next day for Intraday. one can trade micro s&p futures for as low as $50. why can we get the same. anyway its upto SEBI how to run the markets, I am planning to withdraw my capital and planning to open an US trading account, any suggestions regarding broker will be appreciated. Thank you.
@nithin if SEBI lowers the margin req for hedged positions…can we expect the margin required to be as low as Rs 10k for a lot
Yes, 10k to 15k for 1 lot of hedged position.
Can check this thread on trading in US markets from India, under LRS one is not allowed to trade in leveraged products, so for a small trader it is not possible to trade in US fno. Coming to equities ,soon we will allow our clients to be able to invest in US equities via our platforms.
Maybe in 2021?
@nithin does this have impact in currency options margin. We don’t have intraday in zerodha for currencies. But narrowing it down to 8x means will it increase margin to about 6 times?
In couple of months.
8x is the VAR+ELM for equities. Currency works on SPAN margin, nothing changes on that.
I mean will it be auto squared off by RMS
Exactly.
Suppose Nifty is at 12226 right now if i short 12100PE and 12400CE with same expiry would it be a hedged position requiring lower margin?
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If weekly is squared off during the market hours, then yeah the risk management will get alerted that margin is short for the monthly and then squared off. But when the weekly say expires on Thursday aftermarket, the monthly will remain naked overnight carrying risk but with less margin.
Similarly, if the weekly is squared off and monthly doesn’t have any liquidity, it will remain naked with higher risk until liquidity picks up.
The risk is lower than just one side, so the risk is slightly lower, so no margin benefit really.
the S&P E-mini like I mentioned earlier has 10% margin requirement (most actively traded futures contract in the world). For Nifty it is around 11 and Banknifty around 13 in India, which is almost as much as E-mini considering we are much more volatile.
We recently had a Banknifty 9% intraday move (the mini budget), so 13% on a bad or very good day is possible. Margin collection has to cover for the risk on such a day. Check this
https://www1.nseindia.com/products/content/derivatives/equities/margins.htm
The margin required for call spread and put spread are gonna come down for sure?
By what percentage to now?
Still don’t know the exact figure, but will fall drastically (>50% kinds)
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News mentions that 8 times leverage can be provided. Leveraged trading in F&O capped at eight times the initial margin - The Hindu BusinessLine
So if I write (Sell) a Banknifty option which requires around 80000/- … 8 times will be 10k per lot …
Is this correct ?
In fact astha trade is showing much lower Initial margin as shown in screenshot I took from their website just now
Can someone verify this ?
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8 times leverage for equity or stocks. F&O is already leveraged, so needs the minimum required margin for both intraday and overnight positions.