Comment on Zerodha F&O margin Calculator

Venu commented on 16 Jun 2017, 07:37 PM

Margins are computed using the SPAN method by the Exchanges themselves. When you write options, you’re potentially making unlimited losses, that’s because, let’s assume when the markets move up significantly, your profits in the short put contract will not be enough to cover the losses you make on the short call contract; because when you write options, your profit is limited to the extent of premium collected. This is why higher margins get charged.

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