What is the Basis of MTM in case of Sell Call and what happens in the MTM process?
As soon as you place a Sell call order, which results in a position, a Trigger price is calculated (as per the formula given below) which is displayed in the Open positions book. Whenever the Underlying price of the shares goes above the Trigger price in case of Sell Call, the Contract would be in the MTM loop. First the Additional margin recalculated as per the new scenario due to price rise is blocked; if Additional margin is found to be insufficient then the orders in the same contract are cancelled. If both these measures fail, then the position is squared off by the ICICIdirect.com. (Strike Price + Margin Amount) Trigger Price for Sell Call position = ————————————- (1 + Minimum Margin %) For Example: You have a sell position in OPT-ACC-30-May-2002-150-CA Current Market price of ACC is 140. Initial margin on ACC is 30%. Initial Margin = (140*30% – (150-140)) = Rs 32 Minimum Margin on ACC is 10%. Trigger Price for Sell Call Position = (150 + 32) / (1+ 10%) =
As soon as you place a Sell Call order, which results in a position, a Trigger price is calculated (as per the formula given below) which is displayed in the Open positions book. Whenever the Underlying price of the shares goes above the Trigger price in case of Sell Call, the Contract would be in the MTM loop. First the Additional margin recalculated as per the new scenario due to price rise is blocked; if Additional margin is found to be insufficient then the orders in the same contract are cancelled. If both these measures fail, then the position is squared off by ICICIdirect.
