Hi guys,
There is something odd, which I noticed for Margin requirements for option trading. Writting some kind of options are totally risk free, If you hold a long position, your risk of writting call for same position would be 0, In fact you would get premium. Same is applicable, If you hold a long call, and you want to sell higher price call, your risk here would be 0.
I asked two brokrage houses about margin requirement for different kind of risk free option selling, And I was amazed to know that evenif I do a risk free Option trading, I would have to pay similar to F&O margin while selling option.
What I Asked is as below.
1. What are the margin requirements for covered call? would I need to pay for script long and call short?
ANS : Both side Full Margin + MTM
2. If I am long on 3800 nifty call and short on 3900 nifty call, do I need to pay any additional margin for short on 3900 nifty call short? Since I hold one long position, My risk for this trade would be the 3800 call premium - 3900 call premium, which I would be paying upfront.
ANS : For call buying you have to pay only call premium and for call selling you have to pay full margin of Nifty
It seems like whenever you sell option, All brokerage houses are asking for margin. Correct me If I am wrong and there is some brokerage house, which actually does not ask for margin for writting options (put/call), if You hold short/long positions in the same script respectively.
regards
There is something odd, which I noticed for Margin requirements for option trading. Writting some kind of options are totally risk free, If you hold a long position, your risk of writting call for same position would be 0, In fact you would get premium. Same is applicable, If you hold a long call, and you want to sell higher price call, your risk here would be 0.
I asked two brokrage houses about margin requirement for different kind of risk free option selling, And I was amazed to know that evenif I do a risk free Option trading, I would have to pay similar to F&O margin while selling option.
What I Asked is as below.
1. What are the margin requirements for covered call? would I need to pay for script long and call short?
ANS : Both side Full Margin + MTM
2. If I am long on 3800 nifty call and short on 3900 nifty call, do I need to pay any additional margin for short on 3900 nifty call short? Since I hold one long position, My risk for this trade would be the 3800 call premium - 3900 call premium, which I would be paying upfront.
ANS : For call buying you have to pay only call premium and for call selling you have to pay full margin of Nifty
It seems like whenever you sell option, All brokerage houses are asking for margin. Correct me If I am wrong and there is some brokerage house, which actually does not ask for margin for writting options (put/call), if You hold short/long positions in the same script respectively.
regards