Comment on Policy on settlement of compulsory delivery derivative contracts — Update Oct 2019
commented on
24 Jun 2020, 10:07 AM
Hi Team,
I understand the need of increasing margin if they are ITM or close to it, citing the risk of physical delivery.
However, why is the margin doubled for short options even when they are far off from ITM and fall in OTM. They don’t have any risk of physical delivery.
For example, ApolloHosp 25-Jun PE written at 1260. The stock price on 24th is at 1400. So this short put option is far off and no risk at all. Even then why are the margins getting doubled??