Comment on Basics on Options Shorting/Writing

Nithin Kamath commented on 24 Mar 2014, 12:12 PM

Mahesh

1. Technically the futures position MTM loss cannot be adjusted by profits from the Put position. But as a RMS team we understand that it is a risk free position and will give you time to bring in MTM losses on your future position.
2. Yes
3. We will have to report margins to the exchanges at the end of everyday, if there is any short margin in the account at the close of markets (3.30pm), it is reported to the exchange, and there might be a penalty. But note that this penalty is only if the margin drops below the SPAN margin which will usually be around 20% below the total margin. So if 30k is the total margin for Union Bank, only if the margin drops below 24k will the exchange penalty happen.
4. We would typically not square off such a position, and will give you time as long as the value of Put has increased and making up for MTM losses. But note that there might be a exchange penalty for such a position.
5. Didn’t get what you were trying to ask.

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