Why did the exchanges publish a clarification on no additional intraday leverage?

@nithin : can you please tell the impact on options volume due to this , as far as my understanding there will be less sellers and more buyers , which increase the premium and also spread will be increased, what do you think ?


That’s exactly done so only very rich can write options and ordinary Indian can buy options and lose there money


Institutional traders were waiting for these days.


Hi @nithin,

Need clarification on this: are you saying that any margin provided by the client by pledging their stocks/MF would only be valid for taking position in the cash segment?

Can that amount not be used for taking, say, NIFTY/Bank Nifty positions?


They are valid to take nifty/banknifty positions.
I think he meant by MTF is a facility where brokers lend money to client for buying stocks for delivery in lieu of interest.

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After this latest margin rules by SEBI
stock options will get some good liquidity and popularity from small retail traders…

What a transparent and lucid explanation. I m eagerly waiting for reduced margin on hedged position. I mostly take covered position, either both in derivatives or sometimes long equity & short option. Will the second option be considered hedged position mr @nithin ?

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It is a great move from Sebi !!

it is definitely good for Retail investor and mainly Zerodha .

  1. Retail investor would not lose more money by doing leveraged transactions. it will allow them to know/learn to make profits with non-leveraged transactions, make more money consistently and use that for more such well informed/planned trades. Famous quote of Warren : Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1."

  2. how beneficial for zerodha ? if i am not wrong, Zerodha makes more money from the brokerage of F&O transactions. Especially the options side. Given the current brokerage calculation is based on per order (and not per lot basis), instead of placing 3 lots in one order, the end user is going to place 1 lot and pay the same brokerage which is flat Rs.20. Actually in the urge of making more money, they will end up in making orders than earlier. This way it is a great going for Zerodha.

Actually this is going to be difficult time for the full fledge broker who are charging the options per lot basis. For them there will be a significant drop in the brokerage collection.

It is not notional funds, exchanges block real money from brokers when position is taken by the brokers clients. Based on overall funds the brokers have with the exchange, position can be taken only to that extent. If the margin from all client positions exceed 90% of the margins placed with the exchange, the broker terminals get blocked, no one will be able to add new positions.

Coming to the brokers who are not capitalized, if they are allowing leverage, it is essentially another customers money which is getting used to fund the customer taking leverage. This is the crux of the problem regulators are trying to solve.


Like I have mentioned in the post, it is announced only thursday evening, in the next few days all brokers will have to follow unless something new is put out on this.

There are many arbitrageurs who will jump in (algos) if option pricing gets skewed. So don’t think there will any issue around that. Volumes in options might actually go up. And if the new margin thing comes through, I am guessing most trading will move to options.


Ah, no, of course you can pledge stocks/MF and take margin to trade F&O.

The other reply was in context of MTF (Margin funding) - allowing people to buy more stocks than the money in the account. This is allowed only for stocks (money funded by brokers to allow clients buy more stocks) and not F&O.

That is good news for me then :slight_smile:

Second won’t be considered hedged position. But what you could do is pledge the stock and use the margin from the pledge to short the option. We will soon allow instant pledge and unpledge so stocks pledged can also be sold instantly if required.


Does calender spread comes under hedge ? How are they going to calculate what is hedge , example buy 11000 ce jan weekly , sell 12000 ce jan monthly

In USA its hedged , let see in india

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There is 1000 points difference between the two, these two won’t form a perfect hedge position but yes may get some benefit till weekly expiry.

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Ok what happens when weekly is squared off and there is margin shortfall

Margin for the naked becomes like normal, so yeah you can potentially have a naked position without sufficient margin. This is the problem with giving margin benefit, unless there is a guarantee that both positions will be entered and exited simultaneously.

Zerodha want to come pledge all mutual fund category , i invested lot of bond fund ,equity fund and hybrid fund , please come through pledging across category in coin platform