OptionQuant, you might have already seen my thread on spreads (specially the first few posts). IMO, selection of strikes and decision about the direction are important factor for trading spreads. They are directional strategies.
1. For every 1 lac invested, I plan to trade in 2 lot s (100 units). ie 100 units call buy, 100 units call sell. That should cover Margin + MTM. Am I right in this? Or do I need to be more conservative.
Rather than looking at this way, look at what amount is at risk and how much is this as % of your account size. 1% to 2% of account size is recommended as risk amount for each trade. Say if you get the spread at 40 Rs, then for 2 lots, you are risking 40*2*50 = 4k. I.e. you are risking 4% of your account, assuming that you have no other plan of cutting the loss. But if you decide to cut your loss as soon as spread drops to 30rs., then you are taking the risk of (40-30=10)*2*50 = 1000. which is 1%. Maybe you can take 4 contracts and still risk only 2% of your acct.
As I mentioned, you need to have system to help your decision about the direction,and few rules to select the strikes. Test that for historical data to see the win/loss stats.
If you are good in picking up 90% winning trades, then probably you might take even higher risk per trade say 8 to 10%. My thumb rule of max risk is - In any timeframe, don't risk amount that I can't make in 1 unit of same timeframe. i.e. If my average weekly return is 5%, then that is max risk I will take on weekly basis. Most of the time, I take much lesser risk than this.
Hope this gives u few pointers to think about risk and money mgmt aspect.
2. What is the expected return per mont on an average that you folks are getting?
This question is irrelevant. How does it matter to anybody. My returns are byproduct of my knowledge, experience, skills, systems, psychological setup, my money blueprint etc.
And I know, I am unique person in this world on these parameter. We all are different, hence there is no guarantee that 2 people will get same result, even with same system, same effort.
Happy Trading.