You can't now use the proceeds from selling shares for 2 days

I think from sep 1

From September 1st, but there has been change in that rule. You will be able to use sell proceeds on same day but 20% will be blocked which will be given back to you on T+2 days.

Adhoc also but minimum 5 times leverage will be available.

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can you guys come up with some modification in the kite terminal through which we are informed about how much margin we can use to do intraday trades since it will become very tedious and cumbersome to keep calculating everyday how much margin has been blocked for t+2 days and how much is not after each and every trade?

Will try to do some changes by sep 1st.

@siva @nithin

1 - So how does the implementation will be done in phased manner if from sept 1 only we have to pay 20% or VAR+ELM (whichever is lower).

2 - What to expect as how much change will take place in Volumes ? As instead of 20x-25x times now will get 5x leverage so is it good to assume the volume in all segments will drop by 3-5 times suddenly from Sept 1 if this will remain the date of implementation.

3 - Why this topic suddenly became so heated, if one trades with leverage and is trading successfully from couple of years then one can use more margin. Those who are just getting profitable it may take them little more time to scale up. Liquidity issues are going to be irrelevant with time as speculation is as old as hills(Jesse Livermore).

Thanks!

Sep 1st.

For sure volumes will come down in short term, need to wait how markets adjust to this new norm in long term.

What I understand ism that If I have Sold a Put , or Sold or Bought a Future, and the margin is Rs 1 Lakh (for any of them). This amount gets freed the moment I square it off and can do whatever I want and with the amount . But If I had bought a Call (or Put) , and the premium I paid was Rs 35,000 and sell it for Rs 36,000. Then either I can use this amount of Rs 36,000 to buy more Options (Calls or Puts) or sell Options and buy and sell Futures, only the next day ?
Would the above be accurate ?

What happens when I implement a strategy ?

CREDIT SPREAD (Or even Debit Spreads)
So If I have done a Credit Spread
Say I bought 11600 CE & sold 11500 CE. The total margin used is Rs 28500.Then what happens if I do the following ?

  1. Square off both the legs ? How much money gets freed immediately ?
  2. Sqaure off only the 11500 CE I sold ? How much money gets freed immeditely ?
  3. Sqaure off only the 11600 CE I bought ? How much money gets freed immediately ?

And how would it work in a four-leg Bull or Bear Spread ?

And just for clarity Short Option Positions means selling either Puts or Calls
And Long positions means buying Puts or Calls ?
Lets call it Description 1

In some context, Short position could mean shorting the market/stock , where you gain if market /stock goes down ? If this was it , then Buying Puts or Selling Calls would be shorting, where one would gain by the market/stock gping down . Lets call it Description 2 .

I believe when you say Short or Long Position you dont mean Description 2, but the 1st one? Please do clarify .

Thank you

You can use 35000 to buy options on same day , But not futures or short options .
If on the next day you can use it to buy or sell as you wish.

Yes, it is accurate but when you square-off Long Options position you can only use 35,000. Profits made from this can only be used the next day.

28,500 margin will be freed to your account, plus fund from squaring-off your long Options position.

When you square-off your short position, margins blocked will be freed to your account.

You will get funds equal to Option Premium * Lot Size credited to your account, but margin requirement for your Short Position will increase since it is not hedged now.

Yes, Short Options position means, Selling Call or Put and Long Options Position means Buying Call or Put.

Thank you fore your reply . Would juat like to clarify the following .

Just say the Call option premium per share for Nifty was 15 Rupees , then a lot would cost Rs 1125 (15 X 75). So even though Rs 35,000 was used as margin to purchase the two legs (buy and sell) in a Credit Spread, the buy side used only Rs 1125. So shouldnt the amount of Rs 33,875 (Rs 35000 - Rs 1125), should be available to buy or sell anything ? in fact if margin was Rs 35,000 then it may only be for the selling part of it and one may have had to pay the Rs 1125 seperately ? In that case wont the entire Rs 35,000 get freed up to do anything ?

And while talking about the above, just like to clarify that, does the margin in a credit spread or a strangle also include the premium for the buying part, or do we have to pay the premium for buying apart from margin blocked ?

Thank you very much for your detailed replies.

I just have three follow-on queries.

  1. When I make a profit in Strangle or a Credit Spread , say of Rs 5000. Would the cash available to me immediately be broken into profit from selling and profit (if any) from buying ? Would then the profit from selling be available to me immediately ? Or would the entire amount of profit be blocked for a day ?

  2. Does the margin in a credit spread or a strangle also include the premium for the buying part, or do we have to pay the premium for buying apart from margin blocked ?

  3. And in case you are from Zerodha, could you also please shed some light on why many a times there is a substanial difference between the amount of margin required as shown in Margin Calculator and in the actual margins blocked in trades in Zerodha. I must say sometimes there is a pleasant surprise when the margin blocked actually turns out to be lesser. However, this discprepency prevents one from doing proper planning and making projections. Would need something accurate and consistent for financial projections .

Thank you

Any profit you make, be that from Buying Options or from Selling Options, you can’t use that on same day.

Margin doesn’t include the premium you have to pay for buying options, you will need extra funds apart from margins blocked to buy options.

@Siva can you.

we cant use net profit or profit on any leg of option strategy? @ShubhS9

No, you can’t use any profit on same day, you can use only from next day.

You are talking about kite or in ledger on EOD basis?

we can’t use full profit or 20% of profit proceeds will be blocked only …in case of option selling/buying? @ShubhS9

No, You can’t use full profit made from Option Selling or Buying on same day.

I didnt understand “ledger on EOD basis”
I will explain…
when I go to the margin calculator webpage and calculate the margin to be blocked… say it comes to Rs 23,000 for a particular credit spread. But when I go and actually purchase the exact credit spread in Kite. It seems to deduct much lesser (say Rs 16,500) from my funds. So is the funds inaccurate and show me the correct deduction later, or is the calculator inaccurate ?

Maybe you let me know next time if that happens, calculator should be close to live.