Commodity hedge margin

Hi @Dhan_Help

Isn’t there hedge margin for commodities ? The hedge benefit you have shown here is just the premium value of the long option. No change in margin required for short option. Pls clarify.

Hi @Dhan_Help @PravinJ

Any feedback on this ?

HI @t7support,

The hedge benefit we provide is as per the exchange for the respective underlying (MCX/NSE). We got this checked and found the margin requirement you see is accurate.

Jay K.

The final margin you have shown is same as that for a naked sell position. Are you implying that there is no hedge benefit in mcx ?

Hi @t7support

We do give exchange prescribed margin benefits on commodity/mcx also. As per the exchange VaR + ELM & other RMS calculation, the margin requirement is correctly shown in the screenshot.

You may be comparing this with basket order margin requirement at other platforms, which reduces the premium to receive upfront. We do also pay back the premium to receive in trading account after the execution of basket. But the amount you need in trading account to successfully execute the basket is the one shown in the screenshot (exclusive of premium). And we feel this is the correct and transparent way of showing the money and margin requirement.

Hope this helps!

Hi @t7support,

We have mentioned the amount of hedge benefit and same can be seen as difference between Overall & Final margin. As compared to Equities and Index (Nifty & Banknifty), yes, we see this in on the lower side in MCX. We have checked and found the hedge benefit is in the similar range across the industry for MCX.

Jay K.