Would In-the-Money or Out-of-Money be considered for Margin calculation in case of Sell Orders?
Yes, In-the-Money or Out-of-Money would be considered while calculating the Margin on Sell orders. In case of In the Money, the seller of the option would be required to bring in additional amount equal to the difference between CMP and the Strike price in case of Call and difference between Strike price and the CMP in case of Put. In case of Out of money, the seller of the Option is given the benefit and would be required to bring in lesser amount equal to difference between Strike price and the CMP in case of Call and difference between CMP and the Strike price in case of Put. The Margin so arrived is compared with a Minimum Margin (SOMC margin) i.e the Short option margin Percentage, the higher of the two percentages is taken into account.
Yes, In-the-Money or Out-of-Money would be considered while calculating the Margin on Sell orders. In case of “In the Money” contracts, the seller of the option would be required to bring in additional amount equal to the difference between CMP and the Strike price in case of a Call Option and difference between Strike price and the CMP in case of a Put Option. In case of “Out of Money” contracts, the seller of the Option is given the benefit and would be required to bring in lesser amount equal to difference between Strike price and the CMP in case of a Call Option and the difference between CMP and the Strike price in case of a Put Option. The formulas are as follows: In-the-Money: Margin on Sell Call Option= [CMP*IM% + (CMP – Strike Price)] Margin on Sell Put Option = [CMP*IM% + (Strike Price – CMP)] Out-of-Money: Margin on Sell Call Option = [CMP*IM% – (Strike Price – CMP)] Margin on Sell Put Option = [CMP*IM% – (CMP – Strike Price)] The Margin so arrived is compared with a Minimum
