Stuck in Options

#1
Dear Knowledgable Members,

I am badly stuck in nifty options and need guidance from you.

I purchased Nifty 4000 Puts and sold 3900 puts at the begining of this month. While the market was going down, I was having loss on 3900 puts, but that was protected by the 4000 put I was long. However, even though my 3900 short put position was naturally hedged by 4000 long put, yet ICICI squared off my 3900 position on the excuse of it going into losses and it needs more margin.

Now the market has increased considerably, and I have following 2 problems:

1. The unethical behaviour of ICICI in closing my 3900 position is unacceptable. What action can I take against them?
2. Now that my 3900 short position got closed in losses and 4000 still remained, which has now gone into severe losses, due to the upside market has seen since then, what is the solution to me to minimise the losses?

Hope the knowledgeable members would help me out.

Thanks,
Anand
 

mahesh2007

Active Member
#2
Dear Knowledgable Members,

1. The unethical behaviour of ICICI in closing my 3900 position is unacceptable. What action can I take against them?
regretfully almost nothing, as they must have taken your sign at the time of account opening on the clause that gives them the right to cut your positions when MTM loss exceeds your deposit margin with them.

In future, take care MTM loss does not exceed your margin deposit with them.
 

krishna23

Active Member
#4
what you have done is a bear put spread which is a vertical debit spread with limited loss...remember to execute both the legs of the strategy simultaneously as that will help you lower the margin money required for writing options...you should talk to your broker...
and Since the maximum profit potential is limited, it is advisable to exit the position when the underlying trends below the strike price of the sold options.
 

AW10

Well-Known Member
#5
Dear Knowledgable Members,

I am badly stuck in nifty options and need guidance from you.

I purchased Nifty 4000 Puts and sold 3900 puts at the begining of this month. While the market was going down, I was having loss on 3900 puts, but that was protected by the 4000 put I was long. However, even though my 3900 short put position was naturally hedged by 4000 long put, yet ICICI squared off my 3900 position on the excuse of it going into losses and it needs more margin.

Now the market has increased considerably, and I have following 2 problems:

1. The unethical behaviour of ICICI in closing my 3900 position is unacceptable. What action can I take against them?
2. Now that my 3900 short position got closed in losses and 4000 still remained, which has now gone into severe losses, due to the upside market has seen since then, what is the solution to me to minimise the losses?

Hope the knowledgeable members would help me out.

Thanks,
Anand
Dear Anand,
Stop blaming ICICI and take charge of your trading (traders accept responsibility for their action). Brokerage house have the right to implement their risk management actions without informing you. You have already given them this right by signing various papers while opening the account.
Once trade is executed, traders don't forget to monitor their positions and the margin.

Now on your 4000 Put, there is very small probability that it will come in-the-money so most likely it is going to be a loosing position. Better to square off and get whatever small amont you can collect. For me, any amount >0+brokerage is most welcome.

You strategy would have worked great in US mkt where margin requirement is calculated on the liability of complete spread (both short and long leg).. Unfortunately, we are still far away from that in Indian market. So be careful next time.

Happy and Safe Trading,
 
#6
Dear Anand,
Stop blaming ICICI and take charge of your trading (traders accept responsibility for their action). Brokerage house have the right to implement their risk management actions without informing you. You have already given them this right by signing various papers while opening the account.
Once trade is executed, traders don't forget to monitor their positions and the margin.

Now on your 4000 Put, there is very small probability that it will come in-the-money so most likely it is going to be a loosing position. Better to square off and get whatever small amont you can collect. For me, any amount >0+brokerage is most welcome.

You strategy would have worked great in US mkt where margin requirement is calculated on the liability of complete spread (both short and long leg).. Unfortunately, we are still far away from that in Indian market. So be careful next time.

Happy and Safe Trading,
Thanks AW.

While I do acknowledge that a trader has to be self vigilent of his positions, in this particular case I relied on my readings about options, spreads and natural hedges etc.

However, its a lesson well learnt, and I paid the price. The only saving grace for me is that since I am still learning FnO, I was trading with only one lot each, the loss is well under control.

Thanks again for your time and advice. Really appreciate your help.

Thanks,
Anand
 
#7
always try to trade in f&o without any margin..otherwise u will have to face this type of situtaion almost everytime....
Hi,

Could not get your point. How to trade without any margins when you are shorting?

Need help understanding this. Being a newbee in FnO, there is a lot to learn for me.

Thanks,
Anand
 

bandlab2

Well-Known Member
#9
in icici, you need to place 2L, 3L orders so that they consider the combined margin. in this case its 2L -- 2 LEG. While placing the order, you need to do it as 2L

Unfortnately lot of ppl dont know such things and their UI, documentation, help, customer service dont really help the customers. you need to dig deep and learn by experience
 

AW10

Well-Known Member
#10
Bandlab2, do you have any idea about where to go on ICICIdirect platform to place 2L/3L order. The helps says to use link "Place 2L or 3L ordre" but I couldn't find it anywhere.I can find the mention of 2L/3L on "My favourites" link.. but can't place the order there.
Any help / hint is much appreciated.

Happy Trading
 

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