Comment on ZT-Spread Orders

Nithin Kamath commented on 15 Oct 2013, 12:45 PM

SPAN requirements in India for option spreads are pretty high, but they do give a slight margin benefit.

For example in this case, margin required for writing naked 6400 calls is around 39000 for 2 lots, whereas with the spread you can do so with 37600, a margin benefit of around 1400+premium required to buy 6450.

Guess what NSE looks at it is, if you exit the long options the short will remain naked and carry a risk. Since we can’t trade the spread itself and have to take 2 positions to set a spread, there will be an execution risk trading this.

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