Comment on Zerodha F&O margin Calculator

Ashvin commented on 20 Apr 2018, 01:39 PM

Hi Nitin,
The margin calculation is not clear to me for multileg strategies. Below is the example you have given:

NIFTY Sell Call Strike Price 6200
NIFTY Buy Call Strike Price 6300
NIFTY Sell Put Strike Price 6000
NIFTY Buy Put Strike Price 5900

As we can see, both the call option and the put option are covered, with a maximum potential loss of Rs. 100 per stock. The total exposure taken by Zerodha on behalf of the customer is Rs. 5000 (for a lot size of 50). However, your margin calculation is Rs. 41000!

It seems to me that the margin calculator completely ignores the fact that the sell call/put options are protected and assumes all sell calls are naked calls. The whole purpose of using Options is to get leverage. If I have 41000 stuck with Zerodha instead of 5000, then the leverage is not usable.

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