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Home USA TRADE NEWS

SPAN margin for a hedged postion – General – Trading Q&A by Zerodha

by 198usanews_v1nkmf
June 22, 2022
in USA TRADE NEWS
5 min read
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ShubhS9



January 16, 2022, 12:17pm
#23

Alpha_AA:

In case of hedged place Lengthy Futures NRML hedged with Lengthy Put ITM Possibility NRML – if the value begins falling freakingly so I will probably be coated by Lengthy Put ITM Possibility NRML nonetheless to get better some extra loss if I Quick Name OTM Possibility in intraday not NRML – will it nullify the Lengthy Put ITM NRML and my Lengthy Futures NRML will change into bare and therefore the margin requirement will shoot up or this is not going to occur, or intraday is not going to have an effect on the NRML hedged pair?

This received’t break the hedge as your place is in MIS. Although, you’ll require full SPAN + Publicity margins to take a brief place.

Alpha_AA:

Lengthy Put ITM Possibility NRML was 1st row and Lengthy Futures NRML was 2nd row on the time of entry – so which leg order was executed first throughout place making, doesnt have any points on the bodily internet off, this nonetheless holds good?

No, it doesn’t matter during which order the orders had been executed. Your positions will probably be netted-off.

Alpha_AA:

At any time when in any hedged place like Lengthy Futures NRML with Lengthy Put ITM Possibility NRML if we purchase one other Lengthy Put ITM Possibility NRML after which promote the previous one, is not going to promote until the brand new possibility is purchased, will this additionally shoot up any margin for couple of minutes or no have an effect on will occur as for few minute Lengthy Futures will probably be over hedged solely, please advise?

This received’t improve the margin necessities as hedge is already within the place.

Alpha_AA:

At any time when in any hedged place like Lengthy Futures NRML with Lengthy Put ITM Possibility NRML if we purchase one other Lengthy Put ITM Possibility NRML after which promote the previous one, the funds launched by promoting the previous Lengthy Put ITM Possibility NRML comes instantly and 100% to buying and selling account they usually can be utilized for similar day any Intrday F&O / CNC and for In a single day F&O / CNC, please advise?

Funds acquired from promoting choices can solely be used for purchasing choices on T-Day. For all different functions it is possible for you to to make use of the funds from T+1 day.

Alpha_AA:

M2M of Futures will get within the buying and selling account funds similar T day by finish of day , which means earlier than subsequent day market opening after which they can be utilized for Intraday and overnigth for each F&O and CNC?

Proper. MTM revenue from Futures place will probably be credited to your account on T+1 day and you need to use it for any functions.

Alpha_AA:

If we dont use Basket Order and first purchase the Lengthy Put ITM Possibility NRML similar inventory similar month expiry by way of GTT or guide after which second we purchase Lengthy Futures NRML similar inventory similar month expiry by way of GTT or guide will the margin discount profit be obtainable for Lengthy Futures NRML or its obtainable solely in Basket Order?

Sure, it doesn’t matter how you are taking the place, you’ll get the margin advantages.

Alpha_AA:

What occurs in case of CTM 3 strikes rule – Name Choices will change into CTM that are 3 strikes under the expiry day inventory worth and three strikes above the ultimate inventory worth as CTM Put Choices. will they be additionally responsible for bodily settlement Lengthy (name or put) and Quick (name or put) positions each?

NSE has discontinued DNE (Do Not Train) facility for CTM contracts. So these contracts too are compulsorily bodily settled.

@ShubhS9

Please advise aside from ITM choices getting money settled in indexes (BankNifty, Nifty) and supply settled in inventory, a) what does CTM Shut To Cash choices imply with any made up instance for index and inventory b) what does this CTM will do , will they be handled as ITM and money settled for index and supply settled for shares ,if they’re like ITM why this separate identify CTM is there any distinction between CTM and ITM?

@ShubhS9 Hello Shubh please advise

  1. In Zerodha MCX Curdeoil buying and selling the zerodha margin calculator exhibits the hedge profit when buying and selling for instance 1 lot Lengthy crudeoil future + 1 lot Lengthy Crudeoil Put- however the identical shouldn’t be proven within the basket margin requirement (like its proven in fairness choices)

  2. Are you able to please advise in MCX crudeoil the expiry is what number of days earlier than the talked about date on the contract for future and possibility like Expiry minus 2 days or Expiry minus 3 days and b) what number of days earlier than that precise day of expiry E-2 or E-3 Zerodha will increase the margin for Future, Possibility Promote or Possibility Purchase place

  3. on expiry all choices earlier than ATM will change into zero in crude oil?

  4. Is there CTM idea in crudeoil like 3 ITM strikes from ATM will probably be additionally taken as nugatory?

  5. If any possibility lengthy or brief expires ITM or future shouldn’t be squared off then its money settled and routinely the web revenue and loss will get adjusted (is it advisable if one is in revenue to let it expire particularly in crude oil)



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