Margins for Option Spreads

ethicaltrader · #1 15th September 2011, 11:38 PM

Friends, I have one query regarding margin calculation. Let us say I play a spread trade like buy 5000 call and sell 5100 call. In this case for my sell transaction of 5100 call, while calculating margin required, will the broker take in to account my buy transaction of 5000 call? Or I will have to maintain full margin as if I have just the sell transaction?

I mean, is there any common rule for all the brokers (given by SEBI) or it varies from broker to broker. In such case, what happens with ICICI Direct?

Will highly appreciate your help.

Alchemist · #2 16th September 2011, 08:25 AM

Quote:

Originally Posted by ethicaltrader

In such case, what happens with ICICI Direct?

In case of ICICI Direct, margin has to be maintained for all option positions on individual basis.

Quote:

Is there any hedging benefit between options?

No. Currently ICICIdirect is not offering any hedging/spread benefit within Options. Thereby customers are advised to monitor all the options positions as independent positions and allocate margin for all individual open Option positions (if additional margin is required).

https://secure.icicidirect.com/tradi...es.htm#options

I am not sure what other brokers do.

ethicaltrader · #3 16th September 2011, 09:22 PM

Thanks Alchemist. But its a dampener. I would expect little more sense from ICICI Direct guys.

Any idea from anyone else about any other broker?