newbie nifty futures and options

T

theartofweb

Member
#1
#1
If I am not mistake, the multiplier of nifty is 50? So if the index is trading at 4779 the the nominal value is 1 lot x 4779 x 50 = 238950 Rs ?? Yet, I will need less the 30000 Rs to trade 1 lot so basically the future provides a 1:7 leverage?

Also, I see the the DEC 4700CE is trading at 96/- does that mean 96 x 50 = 4800Rs ??

Thanks
 
SavantGarde

SavantGarde

Well-Known Member
#2
#2
theartofweb said:
If I am not mistake, the multiplier of nifty is 50? So if the index is trading at 4779 the the nominal value is 1 lot x 4779 x 50 = 238950 Rs ?? Yet, I will need less the 30000 Rs to trade 1 lot so basically the future provides a 1:7 leverage?
Click to expand...
Index is the Underlying For Nifty Futures & Yes 50 is the multiplier

Total Margin required consists of 2 parts Initial Margin & Exposure Margin

Initial Margin is What is required by the exchange & one can trade Intraday just having Initial Margin

Initial Margin % changes depending on VaR (Value at Risk)

Whereas Exposure Margin which is also called Span Margin is usually 3% for Index Futures & 5% for Stock Futures.

Span Margin % is declared by the exchange on a monthly basis and remains the same throughout the month irrespective of the Volatility & is required additionally for overnight positions

Also, I see the the DEC 4700CE is trading at 96/- does that mean 96 x 50 = 4800Rs ??
Click to expand...
Yes... calculation is correct...but one needs to add the brokerage & other mandatory taxes as well to the figure you have arrived at...!!!

SG
 
A

adityaagarwal

New Member
#5
#5
Hi Sawant,

I think you r mixing span margin with exposure margin. Actually initial margin is known as span margin which is required by the exchange and which changes 5 times in a day depending upon the volatility in the market.
Whereas exposure margin is fixed a % at the strating of the month and it doesnt changes through out the month
 
SavantGarde

SavantGarde

Well-Known Member
#6
#6
Hi Aditya A,

You are correct about Span Margin being same as Initial Margin & I stand corrected for the error on my part...Thanks A Ton...!!!

SG

adityaagarwal said:
Hi Sawant,

I think you r mixing span margin with exposure margin. Actually initial margin is known as span margin which is required by the exchange and which changes 5 times in a day depending upon the volatility in the market.
Whereas exposure margin is fixed a % at the strating of the month and it doesnt changes through out the month
Click to expand...
 
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