Comment on Zerodha F&O margin Calculator

Abhinav commented on 22 Feb 2018, 11:01 AM

Hi Team,

Can you just help me in understanding the concept of Shorting of Call / Put.
Lets Suppose:
Short Nifty 10200-PE: 750 Shares (10 Lot)

As per the Margin Calculator…following are the requirement:
Span: 2,35,875
Exposure Margin: 2,32,940
Premium Receivable: 1,875
Total Margin: 4,68,815

Now after Shorting 750 (10 lots), my margin will be blocked 4,68,815 and I received the premium of 1,875.

Now let’s say…

Current Value of Nifty is 10900
Value of Nifty 10200 PE is 25 (Assume)

After 3 days
Value of Nifty is 10750
Value of Nifty 10200 PE is 40 (Assume)

As per my understanding, I invested 18,750 (750*25) and after 3 days the value of 10 lots (750 shares) will be 30,000 (750*40).
Since I had Shorted the share so my net profit/loss will be: 18,750-30,000 = (-) 11,250 (means loss).

Now can you please help me in understanding the following:
1) Why I need that much huge margin (as per the example, let’s say 25 times margin (4,68,815 / 18,750) in my account to Short the 10200 PE.
2) At what value of nifty (10900 used in example), the whole margin will be squared off.

I am new to trading and will be really thankful to you for helping me out.
It would be great if you will reply via mail.

Regards

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