Margin for Shorting Options

[tristam15]

Hey guys,

I'm quite new to trading and I'm having a tough time calculating the margin required for shorting/selling options.

I'm only paper trading and trying to figure things out before putting in some cash.

If spot price for NIFTY is 5499.2, min lot is 50, what is the margin money required to short a call of 5800?

Thanks,

Prithvi

 

[sylar123]

Hey guys,

I'm quite new to trading and I'm having a tough time calculating the margin required for shorting/selling options.

I'm only paper trading and trying to figure things out before putting in some cash.

If spot price for NIFTY is 5499.2, min lot is 50, what is the margin money required to short a call of 5800?

Thanks,

Prithvi

@tristam15, You need to talk to your broker about margin required for selling options. It totally depends on your broker and there is no fixed margin money which is required.

 

[tristam15]

The margin money is set by the exchange is it not? Can someone please confirm this?

 

[anayash]

The margin money is set by the exchange is it not? Can someone please confirm this?

It's set by the broker!

 

[sr114]

actually the span margin is set by NSE and brokers sometimes collect some extra %age which is beneficial for the clients. om shorting of option the full span margin of NIFTY is required which is about 10 + %age of the value

 

[sylar123]

The margin money is set by the exchange is it not? Can someone please confirm this?

as @anayash stated, it is not set by exchange. Exchange might set a guideline but it is totally implemented by the broker.
Your broker may not block any margin (if so tell me the name of broker ), or it may block a very large chunk depending on their risk management.

 

[tristam15]

I'm using ICICI Direct, so if I wanna trade in Nifty options? How much margin money would I need per lot?

Thanks

 

[sylar123]

I'm using ICICI Direct, so if I wanna trade in Nifty options? How much margin money would I need per lot?

Thanks

If you are buying Put/Call, you will need Price*50 per lot of margin. e.g., if the price of 5500 Nifty Call is 37.05 (today's price), you will need Rs 1852.50 + brokerage as margin to buy 1 lot of it.
For selling Put/Call, as told earlier you need to talk to your broker about the margin required.

P.S. - You seem to have low knowledge of options and I would suggest to start trading options after understanding risk associated with it.

 

[tristam15]

I'm trying to do paper trading, but I want a software that allows me to trade in realtime with realtime everything except for money.

Any tips?

 

[ashwini kumar]

As you are using ICICI Direct, you will an option called Margin Calculator wherein you need to select the Strike Price, Sell and the current premium value of the strike price in option and you will get the margin required to short a call. If you have enough money, I would suggest you to short a call only on the expiry day as the percentage of success would be 99.99%.

Ashwini Kumar