How will peak margin affect margins for Hedge Positions?
Customers today enjoy the benefit of margin if the trades are hedged. Going forward if you square off the hedge position then it is important to square off the leg of the transaction which has higher margin requirements first. If this sequence is not followed, your peak margin requirement may shoot up and if sufficient margin is not available, it may lead to a penalty which has to be borne by you.
E.g. You have only Rs.50000 as an available margin. Now you buy 1 Lot of NIFTY 13000 CE @ Rs.20 and then sell 1 lot of NIFTY 13200 CE; then margin requirement for 13200 NIFTY CE will only be approx. Rs.25000 to Rs.30000. Now you square off NIFTY 13000 CE, and the margin requirement for NIFTY 13200 CE will increase to Rs.1,35,000. Since you only have Rs.50000 as margin this will lead to a shortfall and attract a penalty.