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Future and Option Selling Margin Has Increased from 21 January 2019 What to Do


Here is the new change in future and option selling margin from 21-January-2019:

Change in F&O margins from January 21, 2019

Here are the official circulars:

SEBI: https://www.sebi.gov.in/legal/circulars/dec-2018/review-of-risk-management-framework-for-equity-derivatives-segment_41314.html

NSE: https://www1.nseindia.com/content/circulars/CMPT39766.pdf

There will not be any change in margin for option buyers. However if you are future trader or option seller – this might effect you. Mainly profits will reduce in terms of percentage on the margin blocked if you trade future or sell options.

Well there are a few things that you can do while trading options as a seller or trading futures:

  • Try to scalp your trades: Scalping is an art where an trader calculates every expense in a trade like brokerage, taxes (STT), GST and of course short term tax and knows how much points he needs to make a profit after paying all the taxes. This is where he exits the position. For example let say in a trade 2 points are required for brokerage and taxes, he will try to exit in 5 points. This means he can take multiple trades in a day and come out good. Of course scalping is hard to do in positional trading. But its not that difficult. Its just that we target more profits and come out successful most of the times. My nifty and bank nifty courses teach exactly that. Strike selection, when to enter a trade, when to exit, how to hedge, adjustments if any required or hold without adjusting etc, everything is explained well.
  • Trade with less number of lots: of course this is natural, if more money is blocked as margin then you cannot trade with the same number of lots as you traded a before Jan 21, 2019. Do not force yourself to trade with more lots by taking a loan or asking money from your parents or friends.
  • Take less trades: Earlier you were able to take 3-4 trades in different stocks or index now you cannot do that. So reduce the number of trades you take at one time. When you have no other choice you have to trade less.
  • Practice Intraday Trading: Less margin is required in intraday trading so try to trade intraday if possible. Of course if you have a job it gets difficult to trade Intraday, but whenever you can trade Intraday or just trade positional when you are more confident.
  • Learn Hedging: In USA margin is blocked on the maximum loss in a hedged trade not more. India tends to copy US markets rules and regulations, so you never know when the same rules will be applied in India. Knowledge oh hedging will help you when such a rule is applied in India too. To give you an idea less than 25% of the margin blocked as on today (14-Feb-2019) will be done if the “maximum loss in a hedged trade” is blocked as margin. This will increase the volumes and of course you will get the first mover advantage of already knowing hedging the trades. You will learn hedging in my course.

The idea is not to get frustrated and force yourself to trade. Not take a loan or do anything drastic that will destroy your wealth. It is always better to make less in stock markets than lose money in trading.

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Hi, I am Dilip Shaw, owner of this website. I am a trader like you. I have been trading since 2007, but lost a lot of money till 2010. I then stopped trading and studied options like college exams. Started trading again from 2011 and never looked back since. I did a lot of research, read books and did countless paper-trading before being profitable. You can read about me here.

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P.S: So many years of trading has thought me one thing - it is always better to make small profits month after month, rather than lose money month after month trying to make too much money. It never happens. But small money accumulated month after month can become very big in only a few years.

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About the author: I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

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