What are margins in options trading?

Margins are an essential part of Options trading. It is the money or security a trader has to deposit in his account while trading in Options. Margin requirements are decided by BSE and NSE. The margins on Options vary depending on the type of Option and the underlying. Margins on Options are different in nature from margins on stocks and futures.

Should you trade on margin?

Trading on margin allows you to leverage gains when the price of an asset moves the way you hoped – or lose more than your initial deposit if a trade goes against you. Capital.com offers negative balance protection to protect you from this.

What is margin requirement?

It is done to prevent over speculation and excessive trading. It is that margin requirement which investor talks about when dealing with margin trading. Until there is enough margin in the account i.e. greater than or equal to the initial requirement, the investor can freely use his account.

What is the exposure margin for stock options?

In addition to initial or SPAN margin, traders also need to deposit exposure margin. The exposure margins for stock options and index options are as follows: For Index options: 3% of the notional value of open positions.