Hi tradetolearn,
I do not know what Zerodha is saying. They are trying to confuse the issue as they are on a weak wicket in this case.
I can only explain what Zerodha is doing currently and how it hurts option writers. Basically they want to eat the cake and have it too.
They give funds availability with Margin in the back office and also under surveillance-RMS-Clients margin. In addition they also send e-mail at the end of the day about available margin.
In all these three documents, Margin availability is based on (Clients funds +premium received for writing options)-( Span margin +exposure margin). This clearly means that they allow Funds received for writing premium towards available margin.
Client takes additional position based on Margin available as per above.
When market become volatile, they liquidate clients position based on margin availability/requirement as per the following calculations:
Clients Funds-(span Margin+exposure margin).
In this calculation, suddenly Rs. X lakhs are withdrawn,which was the premium for writing options. So far this amount is shown included in clients margin for taking additional position. This sudden change in the basis of margin calculation is the bone of contention.
Lot of guys have supported Zerodha's position in this respect. I do not understand "How can it be supported ?" How do they expect a client to dream that some funds available so far towards margin is not available today--a special day of Zerodha. MY POINT IS THAT THERE SHOULD BE ONE POLICY FOR ALL DAYS SHOULD NOT VARY AT THE SWEETWILL OF BROKER.
Some people have said outright that it amounts to pyramiding and hence should not be allowed. Firstly it is not the issue whether it is pyramiding or not. Issue is "uniform policy for calculation of margin requirement.
If you are interested in knowing more on the subject, you can send me an e-mail at ravindera_kumar @yahoo.com.
Thank you,
I do not know what Zerodha is saying. They are trying to confuse the issue as they are on a weak wicket in this case.
I can only explain what Zerodha is doing currently and how it hurts option writers. Basically they want to eat the cake and have it too.
They give funds availability with Margin in the back office and also under surveillance-RMS-Clients margin. In addition they also send e-mail at the end of the day about available margin.
In all these three documents, Margin availability is based on (Clients funds +premium received for writing options)-( Span margin +exposure margin). This clearly means that they allow Funds received for writing premium towards available margin.
Client takes additional position based on Margin available as per above.
When market become volatile, they liquidate clients position based on margin availability/requirement as per the following calculations:
Clients Funds-(span Margin+exposure margin).
In this calculation, suddenly Rs. X lakhs are withdrawn,which was the premium for writing options. So far this amount is shown included in clients margin for taking additional position. This sudden change in the basis of margin calculation is the bone of contention.
Lot of guys have supported Zerodha's position in this respect. I do not understand "How can it be supported ?" How do they expect a client to dream that some funds available so far towards margin is not available today--a special day of Zerodha. MY POINT IS THAT THERE SHOULD BE ONE POLICY FOR ALL DAYS SHOULD NOT VARY AT THE SWEETWILL OF BROKER.
Some people have said outright that it amounts to pyramiding and hence should not be allowed. Firstly it is not the issue whether it is pyramiding or not. Issue is "uniform policy for calculation of margin requirement.
If you are interested in knowing more on the subject, you can send me an e-mail at ravindera_kumar @yahoo.com.
Thank you,
