Comment on Basics on Options Shorting/Writing

Venu commented on 22 Dec 2016, 12:38 PM

We’re against giving suggestions/recommendations.
On the query you’ve asked, every time you short an option, margins get blocked. When the contract price goes against you, your MTM losses increase and your margin erodes. This is when you’ll have to bring in additional margins or square off your positions. In the above example, since the contract has caused a loss of Rs.20, your MTM loss would be Rs 750*20 = Rs.15,000. This 15,000 gets reduced from your actual balance of Rs.1,20,000 and you’d be left with 1,05,000. You would have to bring in additional fund to carry forward your position or square off a few lots. Writing options has been explained in detail on Zerodha Varsity here: http://zerodha.com/varsity/chapter/sellingwriting-a-call-option/

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