Hedge Benefit

If I already hold a Put Long Options position and place a Futures Long position later, will I get hedge margin benefit immediately or will I be required to provide full margin for the Futures Position ?

With regards to  hedging of positions & the resulting margin benefits, let us first understand the SPAN margin concept. Clearing Corporation uses the SPAN system for the purpose of computation of initial margin, which is a portfolio based system. It analyzes various market scenarios to determine the initial margin requirement  to cover the potential losses. The hedge margin benefit is given on the initial margin component for the mentioned scenario is as below

• Once you place an order for Futures Long position (a hedge), SPAN system recalculates and will ask for lower margin on order placement considering the hedge position benefit.
• The system will not ask for the full margins on the order placement of Futures Long position.

Let us simplify this with an illustration below:

You have an open position in Put options as below:

Once you place an order for Futures Long Position as below, the margin benefit on hedge position is given as under:

Below is the benefit comes under Margin calculator:

You can always view your hedge margin benefits while taking additional position through “Include open position” tab, under F&O Place order page, Watchlist and Basket Order page, available on the website.