problem in selling options

[AW10]

Hi AW10

You said that the obligation by selling a nifty option is 2.5 lakhs. Is it same for all options ?. For E.g:

Today nifty is at 5100
Is the obligation same for a put option of 5100 strike and a put option of 4500 strike? How much amount would I need in my ICICI account to sell 1 option of 5100 strike?

Margin should be generally about 12% of 2.5 lac (approx 30k) in ICICI. But there is additional span margin for particular option depending on their strike (i.e.ITM options).

Check with ICICIDirect directly about margin.. Inside their trading account, they have margin calculator as well.

Hope this answers your question.
Happy Trading

 

[yasaswi111]

Thanks for the reply guys, AW10, who are private funds in this game? how different are they from hedge funds, Mutual funds, FII( with respect to rules).
Can you suggest me any website or rule book for these funds.

Also can any NBFC take money from people and speculate them in options and futures?


Thanks
Yash

 

[AW10]

by Private funds, I meant various PMS schemes run by brokerage house. There are many traders, who have managed to sell their trading performance to few clients and they manage other people's money. These types of players are not regulated by sebi/govt etc and don't have any obligation to report regularly to sebi etc.

But hedgefunds, FII, investment trust (where few people come togather, pool the money and nominate someone among themselves as fund manager), mutual funds etc
are more formal and they have different obligations to regulators.

These are the big players in the market. Not necessarily that they have great performance but they do have big account size to handle.

Generally, the regulated institutions (including NBFC) have to tell SEBI about their objective and investment vehicle. So if they have the permission then they can speculate. Regulators do have their parameters for various categories (like a Bank can't speculate, a xxx type of company can't have more the x% of exposure to certain type of investment/loan etc).

These are as per my understading of financial institutions. Will be happy to see the views from others.

Happy Trading

 

[yasaswi111]

Aw10, thanks for the reply, earlier in this thread you mentioned that brokerages take the margin almost equalling nifty futures if we sell one lot of nifty options, has this been made mandatory by SEBI or NSE or its the own rule setup by Brokerage houses.

Because generally when we sell options, shouldn't we get the money?

 

[AW10]

For the margin, it is better to check with your broker. There is no standard rules for it.
NSE just sets the minimum margin required from a broker for an obligation. But brokers are free to collect extra to manage the risk effectively.

You are right, when selling option, we collect money from market and hence margin requirement is adjusted for this extra cash inflow.

Happy Trading

 

[mehulji]

Margin should be generally about 12% of 2.5 lac (approx 30k) in ICICI. But there is additional span margin for particular option depending on their strike (i.e.ITM options).

Check with ICICIDirect directly about margin.. Inside their trading account, they have margin calculator as well.

Hope this answers your question.
Happy Trading

Margin requirement for selling a strangle or straddle or short guts is approximately 36k to 39k.That is full and final.

 

[RAWT]

hi experts,today i buy 5600 call sell @61.00 two lot how to i profit if nifty slip 5500 or rs 50 how much i benefited & in a same way if nifty goes up 5700 or 71 how much i loose please suggest me
regards

 

[munde_77]

Please clarify, you want to sell or buy call

 

[rkkarnani]

Check the link , for those interested in writing Options...

http://www.equis.com/events/webinars/?t=SEMWEB-MSSO&p=35712