Comment on Zerodha - Margin Policies

Nithin Kamath commented on 04 Mar 2013, 10:06 AM

Hi Arup,

The margin benefit you see on SPAN calculator, is what NSE asks for, it reduces a bit when you are hedged, but not by much.. Remember on SPAN calculator, after adding both the positions using net quantity, you click on both of them when you click on get SPAN..
Presently for this position the margin requirement I see is : for shorting 5600 puts, Rs 18900, for shorting 5600 puts and going long 5500 puts: Rs 18000.. SPAN goes down and also you don’t require extra funds for buying the 5500 puts..

The reason exchange has to do this is because once you have both positions and if you exit the long puts, there still has to be sufficient margin to hold the short puts, otherwise it is considered a risk.. I guess this problem will get fixed only when exchange approves a product which let’s you enter a strategy in a single click and exit them in a single click…

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