Do I need margin to exit my F&O position?

Yes, you need margin if you have hedged, and no if you haven’t hedged. 

Mastering margin requirements in F&O trading empowers you to navigate the markets with confidence. Let’s explore how understanding margin helps you manage your positions effectively, particularly when optimising your exits.

Exiting F&O Positions and Margin:

Exiting Unhedged Positions:

• Generally, when you’re simply squaring off an open, unhedged F&O position (like selling a futures contract you bought), you’re closing the existing position. Therefore, you’re not opening a new position that would require new margin. However, margin is required while the position is open.

Exiting Hedged Positions:

• Hedging involves taking offsetting positions to reduce risk. When exiting a hedged position, the margin requirements can be more intricate. The margin requirements are lower for hedged positions than for unhedged positions. But you still need to have the required margin while the positions are open.

Existing Orders and Margin: 

• A common scenario where you might encounter margin requirements when “exiting” is when you have existing open orders (like stop-loss or limit orders). If you try to place another exit order without canceling the existing one, the system might interpret it as opening a new position, thus requiring additional margin.

Expiry Day and Margin:

• On expiry day, margin requirements can change, especially for options that are in-the-money and subject to physical settlement. In such cases, you might need additional margin to fulfill your settlement obligations.

If you have any questions or need further support, don’t hesitate to contact Share India’s support team. You can reach us at 18002030303 or email us at support@shareindia.com.