Comment on Basics on Options Shorting/Writing

Jinesh commented on 04 Sep 2016, 09:12 AM


1) How those margin requirement is to be satisfied ? Is it cash or it can be stocks as collateral as well ?
If my understanding is correct it can be 50:50 (Cash : Stock). Please correct me if am missing something.

2) If stock is used as collateral does brokerage charge any DPC or any charges ?

3) I made one trade- Sell ONE LOT BANKNIFTY for strike 19700 and expiry at Sep-End. Current Bank Nifty is around 19800.

Margin Required = Rs.59,000.
Total Premium = Rs.880.
Time to expire = 29 days.
Brokerage + Tax = Rs115 (one-leg)

My Expected Return on Margin (if 100% cash), if hold until expiry = around 16%.

Now, if I put Margin with 50:50 (cash + stock), my Return number (on cash margin) would be doubled = 32%.

Are my numbers correct ? or am I missing anything.
Do I have to pay any interest (DPC) on stock being used as collateral instead of cash ?


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