Comment on Basics on Options Shorting/Writing

Nithin Kamath commented on 03 Sep 2015, 01:08 AM

There is not really m2m as such that happens when you short options. When the market moves against you, the margin required keeps going up significantly. So in a sense it is m2m of the margin that is blocked for writing options.

Assume margin to write calls is 10,000 when price is Rs 100. (lot size 100)

Goes to 105, market moves against you, the new margin required goes upto 10500 + (500 loss, which gets covered in the margin blocked).

Goes to 110, new margin required 11000

Goes to 90, margin drops to 9000

Goes to 80, margin drops to 8000

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