ent Framework & Margin Structure for Hedged F&O Positions

In addition to SEBI’s attempts to safeguard investor’s capital against risk & continued volatility due to global pandemic, new framework with regard to FnO margin requirements are going to implement with effect from 1 st June 2020. The regulatory board has tried its best to motivate the traders to make protective or hedged positions by extensively lowering the margin requirements for hedging while the naked positions will require raised margins. Wisdom Capital has always been to the fore in offering highest leverage across the brokerage industry and already operating on the same line of idea. For margins; please click fo-margin-requirements

The group of traders who shape their positions by mutually engaging various financial instruments like future & options are going to be aided in a big way. The probable returns for such low-risk technics will upsurge. For instance, the requirements for vertical spreads like Iron Condor to be discounted by howling 70%. The Price scan range which is used to determine F&O margins is now changed to 6 sigma from 3.5 sigma. This implies that when markets are volatile, the margin required for naked positions will be higher than before. With prolonged volatility,the margin required for naked positions is up by ~20%. The higher PSR means that there won’t be a sudden spike in increase or decrease of margin going forward, it will be gradual.

Major changes and their implications

Achieving Stable and Conservative Margin: Simulation

CURRENT Vs NEW HEDGING MARGINS