Are there any updates on the utilization of collateral margin first and free cash later?
Do I need to maintain free cash in order to carry forward option buying?
Let’s say.
I’ve got 95 L cash collateral margin (The margin I get from pledging cash components such as Government securities or any other as prescribed by Dhan)
Also Am left with no free cash in my account.
And now i take a strategy home that requires 75L worth sell legs 20L worth Buy legs as hedges.
Do I need to have free cash for buy legs or it’ll be utilized from the margin i received from the pledging of cash component?
Free cash is utilised first and collateral margin later. In the example shared by you-
Cash component margin will be fully utilised for the strategy and there will be no margin shortfall. However, if there is any ledger debit post taking the trade, interest will be applicable.
If Dhan is utilizing free cash first and collateral margin later then this is a serious issue and not favorable for us. I guess Dhan knows the reason.
And am surprised that how buying is being allowed from the collateral margin. Though its favorable for users that no free cash is required and margin will be utilized from cash equivalents.
How will you recover the losses if the contract expires worthless?
@Bhaskarsingh It is our RMS policy to utilise free cash first.
Buying is allowed either ways, whether margin is in the form of cash or non cash component. However, incase of cash component 50-50 margins need not be maintained and you will not be charged interest. This is uniform across all brokers.
I have been waiting for this to edit as promised by @PravinJ
Nonetheless, Dhan is doing a fantastic job, and am very proud of the whole Dhan team.
I know running a business amid such heavyweight competition and catering to clients with such a diversified mindset is a very tough job.
Trust me you guys are doing good. Take a moment to appreciate yourself.
Am just ensuring that I land into a good team.
Hopefully, I’ll.
@Pranita@PravinJ Assume I got a margin of 5L pledging by stocks, ETFs (which may not be eligible as cash component). Still I can sell options even without having either 50% cash/cash-equivalent collateral. Correct me if I got the wrong impression. If yes, can those positions be also carried forward ?
You can place the order and even carry it forward. The system will not stop placing orders. However, if there is a margin shortfall, interest will be charged.
Additionally, if you incur any losses and your ledger remains in debit beyond T+4 days, then our RMS team will square off your holdings on T+5 days.
Now I know why my funds keep getting stuck on withdraw. This is so bad, why would anyone with a sound mind block free cash first unless the client purchased something in the cash segment? Does not make any sense at all, should be optimized. Some RMS policies are really bad at Dhan that we have to take hit on and lose so much. I hope this improves. Blocked funds are bleeding interest for me at Dhan right now.