Monday, December 2, 2013

Know your Margins for NSE Futures and Options (NFO), MCX or CDS, (Tech Tools)

Know your Margins for NSE Futures and Options (NFO), MCX or CDS
Do you trade in future and options? As a Futures & Options (F&O) trader, you may want to know the margins you require ahead of making a trade. However, margins vary depending on factors such as the underlying asset, volatility, market lot size and expiry. This could make calculating margins a tricky affair.
Zerodha (http://zerodha.com/margin-calculator/SPAN) has a calculator to compute the margin requirements for options, futures and more complex F&O strategies in equity, currency and commodities.
The tool requires you to select the exchange — NSE Futures and Options (NFO), MCX or CDS — for your trade. It then displays the list of products available in the exchange. The tool also indicates the lot size so that the quantity you select can be adjusted accordingly.
You can enter multiple trades and evaluate margin benefits from calendar spreads or option strategies, such as straddles and strangles. When you write options, the tool calculates the premium received based on the previous day’s closing price. The total margin is computed after including these components.
The tool is available online for free, sans registration.
However, we feel the tool should offer current prices, which will help guide the user with the strike price for options. When writing options, if the strike price entered is not valid, the tool does not throw up the margin needed, nor does it suggest a list of strike prices. Also, we noticed issues, such as when a trade was deleted, total margin was not updated accordingly.

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