Margin Requirement Updates

SEBI has released "Review of Margin Framework for Cash and Derivatives segments (except for Commodity Derivatives segment)".

Highlights:

• This shall come into effect from May 01, 2020.
• No change in cash market.
• It is applicable for FnO (except commodities).

• Naked Future for Indices  (long or short) - negligible increased.
• Naked Future for stocks (long or short) - margin increased.

• Future with Option Protection (OTM) - margin reduced.
• Future with Option Protection (ATM) - even less margin.

• Naked Option (long) - no change

• Naked Option for Indices (short) - negligible increased.
• Naked Option (short) - margin increased.

• Hedged Option Positions for Indices  - margin reduced (almost to 1/3).
• Hedged Option Positions for Stocks - margin reduced (almost to 1/3).

• Additional Margin for highly volatile stocks.

• Calendar Spread continue to get benefit of reduced margin.

Going forward, it will make sense to go for limited risk defined strategies like Vertical Spreads (Bull CALL Spread, BULL PUT Spread, BEAR CALL Spread, BEAR PUT Spread), Iron Condor, Iron Butterfly), Covered CALL and Covered PUT.

Also, we will advise to avoid naked short positions. 

Please trade as per your own plan.

Also, we are updating our workshop to consider this changes.


You can find more details about circular here:
https://www.sebi.gov.in/legal/circulars/feb-2020/review-of-margin-framework-for-cash-and-derivatives-segments-except-for-commodity-derivatives-segment-_46058.html