Margin requirement for selling a Strangle/Straddle

#1
Hi,

If I want to write a Nifty out of money (OTM) call and OTM put how much margin I have to deposit? Presently, I am trading with Ventura Sec.

As on 13th Aug 2010, Span margin for Nifty is Rs. 19,241, and, Ext Margin is 8129. So for one lot in future/writing one lot of call/one lot of put we need to pay 19241+8129=27370.

Now if I sell a strangle buy writing one OTM call and one OTM put, VSL is charging 19241+8129+19241=46611. Is this the margin set by NSE? Also, I would like to know how much other brokerage houses take as deposit? In this case I am standing to loose only in one side either in call or in put. So the margin I expected to be 27370 only for one lot. Please reply.

Santanu
 
#2
Technically you are right but brokers over here don't understand much about options, so they ask for full margin. RK Global holds only SPAN margin for a lot to write.
But if you seek earnestly, you will get brokers who can give margin at even 30% of SPAN
 
#3
Thanks for your reply. I would like to know how much RK Global blocks if one wish to write a OTM Call and OTM put. Also, I have found ventura is charging me full amount (Span+Extra margin) when I am writing a call/put spread. However, the downside is limited in these cases to the extent of the premium I receive.

Members plz help me how much NSE blocks as margin while writing
1. Straddle/Strangle
2. Call/Put spread.

Also, how much other brokerage houses take as margin in these cases?
 
#5
Dear Talon

I checked with RKG. They told that during intraday margin will be blocked for the short option be it ITM,OTM,ATM. But, margin will be released next trading day if that short position is hedged by Future/Option.

This means if I am buying a spread then also initially margin gets blocked for the short OTM call/put although I am long in ATM call/put. Is it the same case with you. Please clarify this!

Members please help me about the margin requirements set by NSE for different option strategies. Thanks.

Santanu