Yes, I am aware about that but they really have no control over it, it is mandated by SEBI.
They do have a workaround for it, you trade on the Zerodha app but the actual trades are carried out by their intermediary, so OTM strikes are not blocked for them. I havenât tried it so canât vouch for it.
They allow naked selling of options which also increases OI and also brings infinite risk to the broker and to the client. But they donât allow naked buying of options where there is only limited risk to the client and no real risk to the broker. The scheme is partly a nudge at zerodha. Like most other things it is covered in good looking bottles.
I know about the orbis custodian route. If you are lucky you will find post in their forum where people have not been able to open an account for over a month. Also it is better to migrate to another broker than go via the custodian route as it comes with several limitations.
Well, all brokers allow naked selling of options. You can buy the long hedge anyway so that the position doesnât have unlimited risk.
Well, thatâs a bummer. Which broker do you recommend apart from Zerodha and Dhan? I have tried ICICI, Fyers and Groww and all of them have major issues. Guess I can give Upstoxx a try.
Yes and most allow the naked buying of options as well. The point I was making is that they are against naked option buying which carries limited worst case risk to the client and the broker. Hence this is partly a nudge. Because of this we donât get upfront hedge margin benefit at zerodha and hence need to have more capital.
I am rooted with Dhan. Upstox if you see NSE data had a drastic drop in their active client base recently.
Thatâs a stretch, theyâre not against it (why would they be against it, it makes them money), due to SEBI rules theyâre not allowed to offer OTM strikes after a certain percentage of OI has been filled through their system. It is not in their hands.
Dumb rule by SEBI and other brokers are not immune to it, if significant volumes shift to another broker, they would also have to start blocking OTM strikes to comply with SEBI rules.
This is listed in one of their articles. Also there are restrictions on MIS to NRML conversion also.
The bottom line is we need more upfront margin to execute option selling strategies in zerodha. Hedge margin kick in later. Orbis route is a very restrictive route too. So I prefer a restriction free broker who provides me upfront hedge margin benefit with no stupid restrictions like that on MIS to NRML conversion.
Theyâve also explained the reason that it is mandated by SEBI.
Again, any broker which gets large enough will face this problem. Even on dhan if suddenly volumes rise high enough for a certain strike, itâll be blocked by Dhan too.
This restriction is not in their control BUT margin requirements is in Dhanâs control yet still Dhan is demanding extra margins.
Someone in this same thread mentioned that Short Straddle requires 70 PERCENT higher margin on Dhan. Iâd honestly suggest the Dhan team to update their margin requirements and improve their RMS as well.
I just said it is partly a nudge as they themselves claim. Also naked option selling can also influence OI. Why that is allowed and not buying ?
I checked this seems correct. @Hardik why is it so ?
It must be a low priority bug for Dhan and hence long pending.
Iâm trying to form a order to get the margin benefit by hedging but it is being rejected with a notification of insufficient fund
i already shifted my 50L fund to zerodha back. some brokers are diverting the extra margin to big players.
you are charing 1.70 times more, u dint check the screen shots in thread?
Hi @Rajuvala Margins are now largely standardised and defined by exchanges. Request you to avoid spreading misinformation on the forum, will be helpful if you adhere to community guidelines. Thank you.
Any update on â margin with existing positionsâ . Looking forward for this feature.
Team
Do you have any plan to add âmargin with existing positionsâ .
This is very important for me , i like dhan and donât want to switch because of just this feature.
All other brokers have this feature so i donât think its a problem for dhan
Can you provide a feature or let me know if it exists in Option trader - can basket orders by default marked as market orders? Or is there a switch for this? I lost money doing my first arbitrage, I didnât realize default basked from Dhan option trader are limit orders. One leg did not execute and I went in loss which was bad for me.
I had asked about excessive haricuts on Dhan. Whom can I reach out for this? Just in 1 scrip I lose about 20% more (I have 2 lots and loss of margin equates to about 10L). RMS is there with every broker, why do they provide more then? How do you calculate this? Ambuja Cement is not a risky company to have 40% haircut!
Also, any timeline on MF in Demat format?
