Comment on Cover Orders - For Higher Leverage

Venu Madhav commented on 15 Apr 2015, 04:01 PM

The reason you feel the margins for F&O are much higher is because F&O is already a leveraged product. Eg: Nifty Futures contract value (Nifty @ 8855.45) is 2,21,386. If you want to carry forward this position of 1 lot of Nifty, the Exchange asks you for a margin of Rs.18000 which means you’re already leveraged 12 times (221386/18000). For BO/CO orders, margins are normally 1/3 of the NRML margins, which means the leverage would be close to 36 times. This isn’t the case with Equities which are fully paid.

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