Comment on Basics on Options Shorting/Writing

Gurmeet commented on 17 Feb 2015, 02:17 PM

Hi Nithin

I am new to Zerodha and just came across this article. I have been using ICICI Direct for many years. My observations on these 2 trading platforms. Will appreciate if you can clarify:

1. The margin requirement for option writing in Zerodha is more than that of in ICICI Direct, what is the reason for that. In ICICI Direct it is 8% of the traded value for OTM options.

2. The MToM is never applied to options (its only to futures) and I don’t think it is a requirement by the exchange. The moment you short an option in ICICI Direct, a trigger price is decided and additional margin is required only when this trigger price is breached. But in Zerodha due to MToM applied on the written options, every day additional margin is blocked for those options.

Gurmeet

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