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How does block funds facility work for Options?
Buying Options
- Only the premium amount needs to be paid. - Example: Buying 1 lot of Nifty 22,000 CE at ₹200 - Required Margin = Lot Size × Premium = 75 × 200 = ₹15,000
Selling (Writing) Options
- Requires margin similar to Futures as the risk is unlimited. - Example: If the margin for selling 1 Nifty Option is ₹1, 50,000, then that amount is blocked.
Option Buyers
When you buy an option (Call or Put), you pay the premium upfront . No additional margin is required, and there's no daily Mark-to-Market (MTM) settlement.
Example: Fresh Position - BUY Contract: Nifty 22500 CE
Lot : 1
Premium : ₹200
Premium Paid : ₹200 × 75 = ₹15,000
Debit :
- Premium of ₹15,000 will be debited from the blocked funds approximately by 4:00 pm - Applicable brokerage + Taxes will be debited from the blocked funds by approximately 9:00 pm. Square off position Price : ₹250
Trade Value : Lot size X Price = 75 X 250 = 18750
Credit :
- An amount of ₹18,750 will be credited to the bank account on T+1 day (T being the square off trade date).
Option Sellers (Writers) Option sellers need to maintain a margin , similar to futures trading. The margin is blocked when the position is initiated and released only when the position is squared off or expires.
Example: Fresh Position - Sell 1 Lot of Nifty 22500 CE at ₹200 (Lot Size = 75)
Margin Blocked: ₹1,00,000 (as per SPAN + Exposure requirement)
Premium: ₹200 × 75 = ₹15,000
Debit: - Margin of ₹1,00,000 is debited from the blocked funds approximately by 4:00 pm - Applicable brokerage + Taxes will be debited from the blocked funds approximately by 9:00 pm.
Credit: - Premium of ₹15,000 will be credited to your bank account on T+1 day (T being the trade date)
Square off
Scenario 1:
Squared Off at ₹180: Profit = (200 - 180) × 75 = ₹1,500
Debit: - Premium of ₹15,000 will be blocked on order placement and debited from your blocked funds by approximately 4:00 pm on T day (T being the square off date)
Credit: - Margin amount + Profit i.e. 1,00,000 + 1,500 = ₹1,01,500 will be credited to the bank account on T+1 day (T being the square off trade date) - Applicable brokerage + Taxes will be adjusted in the above amount.
Scenario 2
If Held Until Expiry & Closes Below 22,500: Option expires worthless.
Credit: - Entire margin amount of ₹1,00,000 will be credited to the bank account on T+1 day (T being the Expiry date)
- Only the premium amount needs to be paid. - Example: Buying 1 lot of Nifty 22,000 CE at ₹200 - Required Margin = Lot Size × Premium = 75 × 200 = ₹15,000
Selling (Writing) Options
- Requires margin similar to Futures as the risk is unlimited. - Example: If the margin for selling 1 Nifty Option is ₹1, 50,000, then that amount is blocked.
Option Buyers
When you buy an option (Call or Put), you pay the premium upfront . No additional margin is required, and there's no daily Mark-to-Market (MTM) settlement.
Example: Fresh Position - BUY Contract: Nifty 22500 CE
Lot : 1
Premium : ₹200
Premium Paid : ₹200 × 75 = ₹15,000
Debit :
- Premium of ₹15,000 will be debited from the blocked funds approximately by 4:00 pm - Applicable brokerage + Taxes will be debited from the blocked funds by approximately 9:00 pm. Square off position Price : ₹250
Trade Value : Lot size X Price = 75 X 250 = 18750
Credit :
- An amount of ₹18,750 will be credited to the bank account on T+1 day (T being the square off trade date).
Option Sellers (Writers) Option sellers need to maintain a margin , similar to futures trading. The margin is blocked when the position is initiated and released only when the position is squared off or expires.
Example: Fresh Position - Sell 1 Lot of Nifty 22500 CE at ₹200 (Lot Size = 75)
Margin Blocked: ₹1,00,000 (as per SPAN + Exposure requirement)
Premium: ₹200 × 75 = ₹15,000
Debit: - Margin of ₹1,00,000 is debited from the blocked funds approximately by 4:00 pm - Applicable brokerage + Taxes will be debited from the blocked funds approximately by 9:00 pm.
Credit: - Premium of ₹15,000 will be credited to your bank account on T+1 day (T being the trade date)
Square off
Scenario 1:
Squared Off at ₹180: Profit = (200 - 180) × 75 = ₹1,500
Debit: - Premium of ₹15,000 will be blocked on order placement and debited from your blocked funds by approximately 4:00 pm on T day (T being the square off date)
Credit: - Margin amount + Profit i.e. 1,00,000 + 1,500 = ₹1,01,500 will be credited to the bank account on T+1 day (T being the square off trade date) - Applicable brokerage + Taxes will be adjusted in the above amount.
Scenario 2
If Held Until Expiry & Closes Below 22,500: Option expires worthless.
Credit: - Entire margin amount of ₹1,00,000 will be credited to the bank account on T+1 day (T being the Expiry date)
Last updated: 3 Months Ago
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Banking
Will I be able to access SSFB Netbanking, SSFB App and services?- What are the different methods for adding funds to my Bank account?
- My existing account with SSFB has a minimum balance criteria. Will I get the benefit of zero balance if I link it to Torus?
- How will I be informed about the account opening & what documents will I receive?
- Can I opt for the 3 in 1 account benefit if I already have an existing Torus account?
- I already have a SSFB bank account. Can I add it in the Torus app?
- What documents are required to open a Torus 3-in-1 account?
- What is Torus 3-in-1 account & what are the benefits?
- How long does it take to open a 3 in 1 account?
- What are the charges for opening a 3 in 1 account and minimum balance required in the bank?
