Margin on Long Butterfly

amrutham

Well-Known Member
#1
As per Interactive Brokers website, there is no margin on Long Butterfly strategy.

Long Butterfly:

Two short options of the same series (class, multiplier, strike price, expiration) offset by one long option of the same type (put or call) with a higher strike price, and one long option of the same type with a lower strike price. All component options must have the same expiration, same underlying, and intervals between exercise prices must be equal.

There is no margin requirement on this position. The long option cost is subtracted from cash and the short option proceeds are applied to cash.


Could any one trading with IB, please confirm if this is applicable in India.

Is there any other broker in India, who provides margin benefit in this case?
 
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amrutham

Well-Known Member
#2
For example,for the below position margin is around 8.5L if they are considered individual.

But if it is considered as long butterfly, margin should be less.

Buy BN 25100 CE 280 Qty
Sell BN 25200 CE 560 Qty
Buy BN 25300 CE 280 Qty
 

VJAY

Well-Known Member
#4
Dear Jagan,
What he mentioned 8.5L is zerodha margin as he trading with them....by asking them more its not possible for them as thier platform is common for all.....Better to ask with IIFL they give personalised margin policy who trades in big like amrutham...bargain for brokerage too
 
#5
As per Interactive Brokers website, there is no margin on Long Butterfly strategy.

Long Butterfly:

Two short options of the same series (class, multiplier, strike price, expiration) offset by one long option of the same type (put or call) with a higher strike price, and one long option of the same type with a lower strike price. All component options must have the same expiration, same underlying, and intervals between exercise prices must be equal.

There is no margin requirement on this position. The long option cost is subtracted from cash and the short option proceeds are applied to cash.


Could any one trading with IB, please confirm if this is applicable in India.

Is there any other broker in India, who provides margin benefit in this case?
Try Wisdom Capital. They offer excellent margin for option trading. Also their brokerage is also lesser. Try their Ultimate plan to get maximum leverage.
 

Hema123

Dream Believe Achieve
#6
Hi, amrutham
You are much better than me in trading world and your trades inspire me alot...! I have few information in this regard --

https://tradingqna.com/t/span-margin-for-a-hedged-postion/241/4

(The only way to achieve this scenario is if the strategy itself starts trading, like the way calendar spreads on futures trade on NSE.

SPAN margins usually are calculated based on worst possible one day move and not over the next few minutes. It is not about being able to exit 3 positions at one time, but what if a trader decides not to? There has to be enough margin blocked so that even if the trader doesn’t exit all positions at once or any such incident happens, there is enough margin to cover for the risk of the remaining positions. -- Nitin, Zerodha)
 

jyotixxx

Well-Known Member
#7
In icicidirect span margin your additional margins are released after you take all the positions.
I have tried this any margin requirement is way too low than Zeodha. But the problem is Brokerage
 

onequorauser

Well-Known Member
#8
I dont think anyone provides a significant margin reduction on spreads in india. The logic is that they are put up as separate legs and are not a single trade as in case of Think or Swim. So they can be dismantled by the customer resulting in a naked position. zerodha does provide some nominal margin reduction. Fyers proivdes no margin on buy side for options. so basically you are only controlling the risk not reducing the margin
 
#9
Astha tarde provide span margin only for carry forward...

35 k is enough to sell option on carry forward basis but brokerage is 10+30=40/lot

check them& ask ...
 

VJAY

Well-Known Member
#10
Astha tarde provide span margin only for carry forward...

35 k is enough to sell option on carry forward basis but brokerage is 10+30=40/lot

check them& ask ...
no they stopped it...now need full margin
 

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