How to Calculate Margin required for Nifty Options

[vinpiper]

Hi Friends

I am having confusion on the calculation of Margin Money for Nifty Options:

For Example:

1 lot = 50

Buy 1 lot Nifty 5500 Call @ 34.00 = -1700
Sell 1 lot Nifty 5400 Call @ 60.00 = +3000
Sell 1 lot Nifty 5200 Put @ 42.00 = +2100
Buy 1 lot Nifty 5100 Put @ 35.00 = -1750

1) Can someone guide me as to how much margin would be required. Is it broker dependent.

2) Also, Do any brokers accept spread orders, or does each order have to be entered individually.

Appreciate the help.

Regards
Vinpiper

 

[trader.trends]

Hi Friends

I am having confusion on the calculation of Margin Money for Nifty Options:

For Example:

1 lot = 50

Buy 1 lot Nifty 5500 Call @ 34.00 = -1700
Sell 1 lot Nifty 5400 Call @ 60.00 = +3000
Sell 1 lot Nifty 5200 Put @ 42.00 = +2100
Buy 1 lot Nifty 5100 Put @ 35.00 = -1750

1) Can someone guide me as to how much margin would be required. Is it broker dependent.

2) Also, Do any brokers accept spread orders, or does each order have to be entered individually.

Appreciate the help.

Regards
Vinpiper

Vinpiper

For buying options no margin is required. You have to pay only the premium amount. For selling margin is blocked. The amount is roughly (strike price + premium)*lot size*10% for Nifty. This is only the initial margin blocked. This is adjusted everyday as per the closing prices. If the position goes against you, you have to keep cash in the account for MTM requirements. It is also broker dependent. That will be the best source to check it out. As far as I know no broker calculates net risk position for margin requirement. IF you have shorted a a call as well as a put your risk obviously is for one lot only but Indian brokers take margin for each trade separately. The premium on the options sold is credited into your account only on the next day.

 

[sumitdasjoshi]

for buying option 5000 ce 40 than
40*50= 2000
margin bloked
for selling option it will be around 25000 and more than that
hope it will be help you.

 

[vinpiper]

Great reply both of you.

This cleared up my doubts.

So, basically with Rs 50000, I can create 1 lot iron condor on Nifty

Thanks
Vinpiper

 

[mandeepsaikia]

Hi,

Please consider a hypothetical case ::

1. Buy 5200 CE @ Rs. 150 ( Nifty - 4900) ( OUT OF MONEY ) :: I pay Rs. 7500 price ( 1 contract ). Sell the same @ Rs. 170 ( Nifty - 4980) :: I recieve Rs. 8500 ( profit - Rs.1000) . Why should I maintain a margin ((strike price + premium)*lot size*10% ) ..because the CE being out the money ..no risk of it being executed???

Please advise.

 

[shivaprasadmb]

Your question is very strange and suggests that you have not read the earlier discussion on the same thread. There is no margin constraints for Buying an option all you need have is the premium amount. This is limited risk whereas selling option is unlimited risk(at least theoretically).I hope this clears the air.

 

[Relish]

Above discussion, it is clear if you buy option call / put, then there is no margin required except value; correct me if wrong?

My question: I bought 2 lot of SBI put 2050 at 7.20 and there is deduction of 1800 rs.

There is another deduction of 1935 rs I don't understand why it is since brokerage should be 60 rs and other taxes; total 68 rs should be deducted?

can any one explain why there is extra 1870 rs deducted ?


Thank's in advance
Vivek

 

[gunsho]

Above discussion, it is clear if you buy option call / put, then there is no margin required except value; correct me if wrong?

My question: I bought 2 lot of SBI put 2050 at 7.20 and there is deduction of 1800 rs.

There is another deduction of 1935 rs I don't understand why it is since brokerage should be 60 rs and other taxes; total 68 rs should be deducted?

can any one explain why there is extra 1870 rs deducted ?


Thank's in advance
Vivek

M2M settlement? I suppose it happened on the next day when market went against your position? I am yet not sure if all brokers consider M2M for option buying though.

 

[yuvrajjj]

Vinpiper

For buying options no margin is required. You have to pay only the premium amount.

so can you explain what happens on expiry day?

 

[strongBuddy]

Thank you very much.