Hi,
So I have been eager to test the MarginPLUS option for sometime now in my ICICI Direct account but developed cold feet each time as I have no idea what it really does (much of this hesitancy is because there is a separate TOS for MarginPLUS!). Finally decided to read through the faq but it left me a bit confused. I will take the example of my today's trade and apply it to MarginPLUS..please let me know if I am right.
I bought 10 shares of Maruti Suzuki @2581 and sold them off @2638. So I had invested Rs 25,810 (let us assume Rs 25,000 to round things off here). Applying MarginPLUS to this trade, my buying power would be 25000*20=500000. So I would have been able to purchase around 190 shares. So on the MarginPLUS order page (as per an image on another site), I would have to select the Exchage (BSE), enter the stock name (Maruti), set the action (Buy), set the quantity (190), set order type (Market). This means that I am purchasing 190 Maruti Suzuki shares on the BSE at market price.
Next in the Cover SLTP Order section I will have to: set the order type (Limit), specify the Stop Loss Trigger Price (say 2570), specify the limit price (5% of 2570 i.e 2441.5) and specify the quantity (190). This means that once the price of the stock falls to 2570 all of my shares will be sold off at 2441.5. In the Cover Profit Order section (if selected), I should specify the Profit Limit Price (say 2581+50=2631) which means that all of my shares will be sold off once the stock price hits 2631 mark.
1. Am I right in my understanding above?
2. Is there any extra cost that I will have to pay the bank?
3. Brokerage and other costs are the same?
4. Once I specify the STLP, will I have to wait until the stock price goes below the specified amount (and consequently take on a huge loss) or will I be able to sell off my shares before the price breaches the STLP price? For example, if the stock price falls to Rs 2575 and I get the feeling that it will continue to drop, can I sell all of my shares around that price (thus taking a loss of Rs 6-7 per share) rather than the bank waiting until SLTP is triggered and selling the shares at the limit price (with a loss of Rs 140 per share)?
5. Regarding the list of stocks allowed by MarginPLUS, what do the various column headings mean? I have attached an image showing the table and if someone is kind enough to walk me through the headings, I will be really grateful.
Regards
So I have been eager to test the MarginPLUS option for sometime now in my ICICI Direct account but developed cold feet each time as I have no idea what it really does (much of this hesitancy is because there is a separate TOS for MarginPLUS!). Finally decided to read through the faq but it left me a bit confused. I will take the example of my today's trade and apply it to MarginPLUS..please let me know if I am right.
I bought 10 shares of Maruti Suzuki @2581 and sold them off @2638. So I had invested Rs 25,810 (let us assume Rs 25,000 to round things off here). Applying MarginPLUS to this trade, my buying power would be 25000*20=500000. So I would have been able to purchase around 190 shares. So on the MarginPLUS order page (as per an image on another site), I would have to select the Exchage (BSE), enter the stock name (Maruti), set the action (Buy), set the quantity (190), set order type (Market). This means that I am purchasing 190 Maruti Suzuki shares on the BSE at market price.
Next in the Cover SLTP Order section I will have to: set the order type (Limit), specify the Stop Loss Trigger Price (say 2570), specify the limit price (5% of 2570 i.e 2441.5) and specify the quantity (190). This means that once the price of the stock falls to 2570 all of my shares will be sold off at 2441.5. In the Cover Profit Order section (if selected), I should specify the Profit Limit Price (say 2581+50=2631) which means that all of my shares will be sold off once the stock price hits 2631 mark.
1. Am I right in my understanding above?
2. Is there any extra cost that I will have to pay the bank?
3. Brokerage and other costs are the same?
4. Once I specify the STLP, will I have to wait until the stock price goes below the specified amount (and consequently take on a huge loss) or will I be able to sell off my shares before the price breaches the STLP price? For example, if the stock price falls to Rs 2575 and I get the feeling that it will continue to drop, can I sell all of my shares around that price (thus taking a loss of Rs 6-7 per share) rather than the bank waiting until SLTP is triggered and selling the shares at the limit price (with a loss of Rs 140 per share)?
5. Regarding the list of stocks allowed by MarginPLUS, what do the various column headings mean? I have attached an image showing the table and if someone is kind enough to walk me through the headings, I will be really grateful.
Regards
