When you trade in the Derivatives market, you are required to deposit margin money with your broker (for example, Sharekhan). This money shields the broker from potential losses if you are unable to execute a trade because of unfavourable market fluctuations. Therefore, you must first deposit initial margin into your trading account to take positions in the Futures & Options segment. The index, the kind of derivative you intend to trade in and market risks all affect the margin amount.
Standardized portfolio analysis of risk (SPAN) and Exposure Margin together constitute the initial margin that required to take exposure in F&O (more on SPAN and Exposure Margins below). However, when trading in Derivatives, there are more factors to be taken into account when calculating margins in addition to these two types of margins. These calculations might be difficult and time-consuming to carry out, especially for time-strapped traders.
An online margin calculator can be useful in such situations to figure out the various margin needs for the Derivatives market position you wish to take. To ease your trading experience, here are the types of margins that Sharekhan’s margin calculator can determine:
SPAN margin is short for Standardized Portfolio Analysis of Risk. This is a leading margin system, which has been adopted by most Futures & Options exchanges around the world. SPAN is based on a sophisticated set of algorithms that determine margin according to a global (total portfolio) assessment of the one-day risk for a trader's account. It is essentially based on the maximum loss you might sustain in various market scenarios. Among Indian bourses, Nifty SPAN margin and other margins are evaluated six times during a trading day. Depending on the time of day you use the calculator, the SPAN margin will offer you differing values.
As the name suggests, the VaR margin calculator takes into account the possibility of loss in the underlying asset’s value. To make this calculation, the algorithm working in the background uses statistical analysis on the historical price movements and volatility of the underlying asset.
Extreme Loss Margin (ELM) is simple enough to understand. Every month, ELM is determined using rolling data from the last six months. Post calculations, it is determined to be the higher of 5% or 1.5 times the standard deviation of the daily logarithmic returns of the asset over the last six months.
At the time of initiating trades, SPAN margin + an additional margin over and above the SPAN margin is collected, known as the exposure margin. This margin is collected in order to protect a broker’s liability, which may arise due to wild swings/moves in the markets. Our margin calculator also takes into account exposure margin.
Firstly, choose the segment you wish to calculate margin for. The appropriate margin calculator will appear just below. Enter a few basic details like the exchange, the product (Futures, Options and so on), enter the first few characters of the symbol and the quantity. Then choose the leg (Buy/Sell) and hit CALCULATE.
The SPAN margin, exposure margin and additional exposure margin (if any) will be displayed with the total margin. Now you don’t need to go far to calculate trading margin. Trade in the Derivatives market seamlessly and with peace of mind!
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When you trade in the Derivatives market, you are required to deposit money with your broker; this is called margin. This money shields the broker from potential losses if you are unable to execute a trade because of unfavourable market fluctuations. Essentially, you must first deposit initial margin into your trading account to take positions in the Futures & Options segment. The index, the kind of derivative you intend to trade in and market risks all affect the margin amount.
Standardized portfolio analysis of risk (SPAN) and Exposure Margin together constitute the initial margin that required to take exposure in F&O. When trading in Derivatives, there are more factors to be taken into account when calculating margins in addition to these two types of margins. These calculations might be difficult and time-consuming to carry out, especially for time-strapped traders. This is where margin calculators come in useful.
No, our margin calculator is free to use! Simply enter the details of your trades to calculate how much margin is required to carry out the trades.
Due to market volatility, if the value of the investment declines, the buyer may suffer a loss. In such circumstances, the buyer can choose not to complete the transaction, costing the seller and the broker (for example, Sharekhan) money. Therefore, the buyer must honour his transaction and pay the appropriate amount when the trade is finalised; this is where the margin comes in. Additionally, the margin guarantees that the buyer will have the funds available to complete the transaction.m
At the time of initiating trades, SPAN margin PLUS exposure margin is required as upfront margin to take exposure in the Derivatives market. This margin is collected in order to protect a broker’s liability, which may arise due to wild swings/moves in the market.
An online margin calculator can be useful for time-strapped traders, who otherwise might have to place trades to determine margins required. This process can end up wasting a lot of precious time. An online margin calculator instantly runs several complex algorithms and can figure out the various margin needs for the Derivatives market position you wish to take to ease your trading experience.m
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