Option writing question

S

singh12

New Member
#1
#1
Hi,

Could someone please help me understand writing nifty options. I understand the Initial margin that is paid upfront - which is the nifty future margin - but cannot follow Mark to market rules. For example: If I short a 4800 put for this series at 51 today, my initial margin is 27000(approx)+51*50.

Now if on monday the nifty is 5000 or 4600 can someone tell me what is the mark to market that I need to give to my broker or get from my broker. Also, if the calculation is based on the nifty index or future. Another question was if I write a spread option i.e. sell lower priced option and buy higher priced option what will my margins be?

Thanks in advance.
 
columbus

columbus

Well-Known Member
#2
#2
singh12 said:
Hi,

Could someone please help me understand writing nifty options. I understand the Initial margin that is paid upfront - which is the nifty future margin - but cannot follow Mark to market rules. For example: If I short a 4800 put for this series at 51 today, my initial margin is 27000(approx)+51*50.

Now if on monday the nifty is 5000 or 4600 can someone tell me what is the mark to market that I need to give to my broker or get from my broker. Also, if the calculation is based on the nifty index or future. Another question was if I write a spread option i.e. sell lower priced option and buy higher priced option what will my margins be?

Thanks in advance.
Click to expand...
Since you have written options ,you intention is to want NIFTY to go
down.Say nifty is 4600 and the premium is 75,for example.you have a
credit by (75-51)*50=1200.
On the other hand if Nifty is 5000,and premium is 27.Then you a debit
by (27-51)*50=-1200.Figures are taken for example sake.
I am not good at spreads, so somebody will take that query.


All such MTMs are totaled when you square-off your trade.
Incidentally the summation is equal to (premium at Squareoff~51)*50.
 
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