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Margin/ Exposure/ Leverage/ Limit General FAQ

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Can I buy options on margin?

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Depositing of cash or any securities in his/her trades account before performing writing or selling options is known as option margin. The Federal Reserve Board in Regulation t manages margin requirements.

The requirements for option trading are very complex and differ from futures and stocks margin requirements. In case of option margin is used as collateral to secure a static position, whereas stocks and futures margin is used as exposure to enhances the buying power.

Do you need margin to sell puts?

Yes we do need margin to sell puts. However trader must request its broker to authorise option trading facility when opening a new trading account. Depending upon the type of strategies stockbrokers decides option trading clearance.

Moreover when we buy options doesn’t require any kind of margin as it’s comes under Level I clearance. Whereas selling puts sometimes requires level II clearance and a valid margin account. However in the case of both the levels III and IV the margin requirement are minimum or we can say the lowest.

What is method to calculate 40% margin?

Basically a margin reflects the percentage of sales price of an item that is profit. If one knows the cost and can easily figure out the sales price to have a 40% margin. Here are the correct calculations:

Your targeted profit % is 40; Take 100 minus 40% and you get 60%. (100 – 40% = 60%) Take your cost of Rs. 100 divided by 60% (or .60 which is just another way to write 60%) and you get Rs. 166.67. That would be the correct retail price to assign.

You can then double check to ensure you have your 40% profit margin by:

Take your set retail price of Rs. 166.67 and subtract your targeted profit %. (Rs.166.67 – 40% = Rs.100.) NOW THAT’S A 40% PROFIT MARGIN!

Margin & Exposure

What is the procedure to calculate a gross margin revenue?

The Gross Profit margin is the profitability ratio that helps in measuring every rupee of revenue which is left after paying the cost of goods sold.

Gross Profit Margin  = (Revenue – Cost of Goods Sold) / Revenue

The top number given in the equation is known as Gross Profit Margin which is denoted by the total revenue generated subtracts the cost of production and services. 

Zerodha MarginUpstox Margin5paisa margin
Astha Trade marginAlice blue marginAngel Broking margin

What is the method to calculate the maintenance and the initial margin?

An initial margin is said to be the minimum margin for fulfill the requirement to purchase stocks. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example as per Regulation T, the initial margin should not be less than 50%.However the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

What is the method to calculate the margin call price?

It is the method of calculating the amount of money on each share can be borrowed from your stock broker for performing any kind of margin trading.You can simply subtract the margin requirement from 1 and multiply it by the price of the purchase.

Is there any way to calculate the margin from the selling point?

A margin is denoted as the revenue you generate after paying COGS. 

For example, suppose we sell books for 100 each. Each book will cost Rs.50. 

Firstly we need gross profit, or to find the difference Rs. 100 (Revenue) and Rs. 50 (cost).

Rs.100- Rs.50 = Rs. 50 gross profit

We need to divide the gross profit by the revenue amount to get the margin value.

Rs. 50 / Rs. 100 = 0.5 margin

Then just by multiplying it with 100 we will get the margin percentage form.

0.5 X 100 = 50% margin

The margin is 50%. It mainly denotes that you hold total revenue of 50% and the other 50% you spent on books buying.

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What is the method to calculate the margin using a calculator?

Suppose you need to calculate a margin of 30% margin using a margin calculator.

  1. You can turn 30% into its decimal just by dividing 30 by 100 which give you 0.3
  2. Subtracting 0.3 from 1.0 will give you a result of 0.7
  3. Then divide the price of the good you bought by 0.8
  4. At last the number you got after calculation is the amount you have to sell your product to satisfy 30% profit margin.

What is the simplest way to calculate the margin?

Suppose you need to calculate a margin of 30% margin using a margin calculator.

  1. You can turn 30% into its decimal just by dividing 30 by 100 which give you 0.3
  2. Subtracting 0.3 from 1.0 will give you a result of 0.7
  3. Then divide the price of the good you bought by 0.8
  4. At last the number you got after calculation is the amount you have to sell your product to satisfy 30% profit margin.

How do you calculate selling price and margin?

Suppose you need to calculate a margin of 30% margin using a margin calculator.

You can turn 30% into its decimal just by dividing 30 by 100 wighich give you 0.3

Subtracting 0.3 from 1.0 will give you a result of 0.7

Then divide the price of the good you bought by 0.8

At last the number you got after calculation is the amount you have to sell your product to satisfy 30% profit margin.

How is margin requirement calculated?

In order to calculate the minimum margin requirement for stock purchase, all you need to simply multiple the number of shares by the price or by their margin rate. However margin requirement in case of short sale the margin requirement is plus 100% of the value of the securities presented.

Zerodha Margin CalculatorUpstox Margin Calculator
5paisa margin CalculatorAngel Broking margin Calculator
Astha Trade margin CalculatorAlice blue margin Calculator

What is the minimum time to accomplish a margin call?

Most margin investors are well acquainted with the routine margin call, most of the cases the stockbroker ask for additional funds when the equity level in the customers accounts depletes below an certain required levels. However every broker will allow from two to five days to meet the margin call.

How much margin does Zerodha provide?

Being a full service broker zerodha offers leverage margin through 3 different types of products segments including MIS, BO and CO. In case of MIS the leverage ranges from 3 to 12.5 times base of the type of the script. You can easily calculate the exact leverage for any specific scripts using a margin calculator. For futures and option writing 35% of NRML margin is required.

What is the minimum margin required for trading in futures?

Let’s assume the total cost of the Rs. 32500 (Rs. 6.50 X 5000 bushels). In most of the cases it was found that stockbrokers provide a margin of 55 of the contract value on trading in futures. In addition to buy and sell positions on a future contract we must keep some money in our trading account to initial any future margin.

To sell Nifty margin what is the minimum margin needed?

If you want to perform short selling nifty options require margin of nifty futures, or in other words we can say that if you want to short sell nifty options you need to have minimum of Rs.30000 for performing any trade. This is mainly done because option writing comes with high risks, while it also limits the profit to premium received at the same time of short selling of nifty option.

Edelweiss margin CalculatorStoxkart margin Calculator
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How much money do you need to sell options?

A good thumb rule must be worked out in order to set maximum possible loss per trade can be afforded. In this case you need to maintain a capital of almost 50 to 100 times more. 

For example if you set a maximum loss at Rs. 1000 then you need to maintain about Rs. 1,00,000.

Should Gross margin be high or low?

When compared with industry standards, a lower margin reflects that the company is under rated or priced. Whereas a higher gross margin denoted that the company can make huge profits in the near future as long as the overhead prices are under control. Investors prefer more to pay for the company with higher gross profit.

What are current margin rates?

The margin interest rates keep changing due to the base rate factor and the variable size of the debit balance. While setting based rates some common factors are considered first like commercial recognized rates of interest, industrial conditions related to credit, market analysis based on the availability of liquid assets and most importantly the general market conditions. Lastly as per latest September 24, 2019 the current base rate is 9.00%.

What is the meaning of 30 margin requirement?

A margin requirement is known as the percentage of securities that a trader or investors must maintain in its trading account with its own cash. However when a trader holds securities bought with the help of margin, its allows minor fluctuation in price too, the minimum margin requirement for most of the stocks is almost 30%.

What are the after results of getting a margin call?

In case of a margin call when you account fails to meet the minimum maintenance margin amount. A call for margin is mostly raised by the stockbroker; it reminds you to fulfil all necessary conditions to maintain the marginal level in your account. It can be done in multiple ways like you can add amount to your trading account or just by closing your previous positions.

Hdfc Securities MarginSmc Globel MarginWisdom capital margin
Indiabulls Subh marginSwastika Investsmart marginKotak Securities margin

 How we can define good profit margin for a retailer?

In case of retail food and drug stores mainly operates on a margin of 1.5 percent. This year automotive retailers reported losses with a margin of 7.9% profit margin. However previous year they started operating at an average margin of 1.1 percent. A good profit margin varies with industries so a 20% margin is considered as the high good margin whereas 5% margin is considered as the low.

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How we can justify a profit margin to be good?

In case of retail food and drug stores mainly operates on a margin of 1.5 percent. This year automotive retailers reported losses with a margin of 7.9% profit margin. However previous year they started operating at an average margin of 1.1 percent. A good profit margin varies with industries so a 20% margin is considered as the high good margin whereas 5% margin is considered as the low.

What does margin maintenance Requirement mean?

In order to calculate the minimum margin requirement for stock purchase, all you need to simply multiple the number of shares by the price or by their margin rate. However margin requirement in case of short sale the margin requirement is plus 100% of the value of the securities presented.

Differentiate between exposure margin and span margin?

SPAN margin is the initial margin which helps in calculating the risk and volatility of the underlying. However the exposure margin is like margin helps in calculating the value of exposure taken by the trader with the help of the broker. The exchange can block the entire initial margin (SPAN + Exposure) if required.

Hdfc Securities margin CalculatorSmc Globel margin Calculator
Indiabulls Subh margin CalculatorWisdom capital margin Calculator
Swastika Investsmart margin CalculatorKotak Securities margin Calculator

Describe the exposure margin of Zerodha stockbroker.

Being a full service broker zerodha offers leverage margin through 3 different types of products segments including MIS, BO and CO. In case of MIS the leverage ranges from 3 to 12.5 times base of the type of the script. You can easily calculate the exact leverage for any specific scripts using a margin calculator. For futures and option writing 35% of NRML margin is required.

What is exposure margin?

SPAN margin is the initial margin which helps in calculating the risk and volatility of the underlying. However the exposure margin is like margin helps in calculating the value of exposure taken by the trader with the help of the broker. The exchange can block the entire initial margin (SPAN + Exposure) if required.

Explain in details about maintenance margin and initial margin.

An initial margin requirement is the required margin at the time of the purchasing any stocks. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example as per Regulation T, the initial margin should not be less than 50%.However the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

In the case of Zerodha what is the exposure margin and initial margin?

A requirement of margin needed in advance for purchasing any stocks is known as Initial margin. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example as per Regulation T, the initial margin should not be less than 50%.However the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

What is initial margin example?

A requirement of margin needed in advance for purchasing any stocks is known as Initial margin. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example, as per Regulation T, the initial margin should not be less than 50%. However, the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

Prostocks MarginTrade Plus MarginBonanza margin
Value trade marginTradejini marginMotilal Oswal margin

What is margin in intraday trading?

Intraday trading is a marginal product for that customer who wants to generate gain from expected upward and downward movement in price within a single day with limited buying capacity. In case of this margin product the trader needs to pay only the margin% required for the transaction to the stockbroker.

What is margin value?

We can say margin value is the money borrowed from the stockbroker in order to perform trade purchases in the form of investments. It is the difference amount between the total securities at traders account and the loan amount sanctioned from the stockbroker. In other words we can say margin buying represents borrowing of money with some rate of interest to buy some securities in the field of trading. 

What is the cheapest investment platform?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

What is the cheapest online brokerage?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

What is the difference between initial margin and maintenance margin?

A requirement of margin needed in advance for purchasing any stocks is known as Initial margin. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example as per Regulation T, the initial margin should not be less than 50%.However the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

Explain Gross Margin?

The Gross Profit margin is the profitability ratio that helps in measuring every rupee of revenue which is left after paying the cost of goods sold.

Gross Profit Margin  = (Revenue – Cost of Goods Sold) / Revenue

The top number given in the equation is known as Gross Profit Margin which is denoted by the total revenue generated subtracts the cost of production and services.

Explain Initial Margin?

A requirement of margin needed in advance for purchasing any stocks is known as Initial margin. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

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For example, as per Regulation T, the initial margin should not be less than 50%. However, the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

Prostocks margin CalculatorTrade Plus margin Calculator
Bonanza margin CalculatorMotilal Oswal margin Calculator
Tradejini margin CalculatorValue trade margin Calculator

In the case of options, how we can define margin requirements?

Depositing of cash or any securities in his/her trading account before performing writing or selling options is known as option margin. The Federal Reserve Board in Regulation T manages margin requirements.

The requirements for option trading are very complex and differ from futures and stocks margin requirements. In case of option margin is used as collateral to secure a static position, whereas stocks and futures margin is used as exposure to enhances the buying power.

In the case of options, how we can define margin requirements?

Depositing of cash or any securities in his/her trading account before performing writing or selling options is know as option margin. The Federal Reserve Board in Regulation T manages margin requirements.

The requirements for option trading are very complex and differ from futures and stocks margin requirements. In case of option margin is used as collateral to secure a static position, whereas stocks and futures margin is used as exposure to enhances the buying power.

Describe the term minimum maintenance margin requirement.

A requirement of margin needed in advance for purchasing any stocks is known as Initial margin. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example as per Regulation T, the initial margin should not be less than 50%.However the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

What is the risk of buying on margin?

The most popular threat of purchasing at a margin is that an investor will lose an enormous amount of money that was originally spent.  For example if the trader unfortunately faces a loss of 50 percent or more from the trade he performed earlier, which may lead to a loss of more than 100 percent or more , plus interest and commissions.

Finvasia MarginSharekhan MarginICICI Direct margin
Samco marginSas online marginTrade Bulls margin

How a margin call gets triggered?

In case of a margin call when you account fails to meet the minimum maintenance margin amount. A call for margin is mostly raised by the stockbroker; it reminds you to fulfil all necessary conditions to maintain the marginal level in your account. It can be done in multiple ways like you can add amount to your trading account or just by closing your previous positions.

Which broker gives best tips?

There are numerous numbers of brokers which provides useful tips about performing any trade. However you can’t compare them which one is best. Rather you can opt for Dalal Street Journal provides India’s one of the best stock broker tips provider and mostly recommended for intraday trading.

Which broker gives highest margin?

Wisdom capital provides the highest margin in case of NSE & MCX. It ranges up to 40X margin in NSE equities and 20X in MCX. This stock broker provides you the scope of trading with both NSE and MCX with additional 15 x times margin Intraday Square off (MIS) depending on the brokerage planes opted by the user

Which broker has the lowest margin rates?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

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Which broker is best for intraday trading?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

Which broker is best for short selling?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading with in an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

Which is better Olymp trade or IQ option?

In case of IQ Options it provides huge variety of assets to trade with. In addition IQ Options provides 90% profit on the staked amount. Whereas Olymp trade offers only 80% profit to its traders in a standard account. This makes the IQ Options more beneficial for traders over Olymp Trade.

Which trading platform is best in India?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

Finvasia margin CalculatorSharekhan margin Calculator
Samco margin CalculatorICICI Direct margin Calculator
Sas online margin CalculatorTrade Bulls margin Calculator

Who has the cheapest online trading?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

In the field of brokering which broker acts as a best discount broker?

Angel Broking is the cheapest online brokerage firms in India; it provides its clients with zero brokerage rate on delivery trades. It also avails their users with paperless DEMAT Account opening. Trading within an hour is totally free of brokerage charges in case of delivery. Maximum margin of about 4x times is allowed based on market updates.

Who pays initial margin?

An initial margin requirement is the required margin at the time of the purchasing any stocks. Where as a maintenance margin requirement mostly represents the minimum threshold amount of equity must be kept as a margin in your trading account.

For example as per Regulation T, the initial margin should not be less than 50%.However the minimum threshold of maintenance margin is set to be 25 percent as per Regulation T guidelines.

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