@ Zerodha
Is it necessary to do this type of spread, Nifty June Buy vs Nifty July sell only, I mean Nifty vs Nifty only or can be done with Nifty Jun buy vs Minifty July sell also, with the payment of margin money of 1 lot only (or 5 lots of minifty to 2 lots of Nifty) for taking overnight position.
Can you give some details of different types of spreads.
Thanks
Chandra,
When you buy options the premium has to be paid irrespective of what the strategy is, there is no margin benefit if you buy options using any strategy..
As far as futures and writing option positions are concerned, exchange blocks margin, but the margin blocked is not per the contract but as per your entire f&o portfolio, hence it is call SPAN margin(Standard portfolio analysis of risk)..
Unfortunately none of the brokers today(including us) have a tool which is given to the the retail that can tell you the margin that will be blocked as per the portfolio.. Most of the margin calculators will tell you only based on that particular contract and not the portfolio...
The reason I am telling you is, yes you should ideally get some margin benefit if you have bought 3 nifty of this month and shorted 5 mininifty of next month.. But can I tell you upfront how much?? unfortunately no.. You will know the actual margin blocked only after taking the position.. It is unfortunate, but that is how it is with almost every broker I know of..
The other way to calculate margin would be to use the PC-span software that NSE sells, they charge around Rs 8000 for the same...
Any spread which has opposite effect on each other should give you a margin benefit.. In calendar spreads, only one side margin is blocked.. Bull call spreads, the margin reduces and etc..
Now the interesting bit, I don't know if someone already provides it, but we are developing a very interesting tool to calculate margins upfront based on your f&o portfolio.. so you can put multiple positions and the calculator will tell you the margins required before you enter the position.. We are hoping to have it on Zerodha Trader before we launch it for equities..