General Queries

When is Extreme Loss Margin(ELM) applicable?

Extreme Loss Margin (ELM) is applicable to all derivative contracts, including Futures and Options, and in certain cases, to trades in the cash market as specified by the exchange.

There is an additional ELM requirement for short index options.

As per the latest regulations, an additional ELM of 2% is required on the day of expiry for short index option positions.

Calculation of ELM for short index options on expiry day is as follows:

Formula:

Additional ELM = 2% × Closing Price × Open Position Quantity

Example:

If you have a short position in Nifty options with a quantity of 1,800 and Nifty closes at 25,000 on the day before expiry, then the additional ELM required on expiry day would be:

2% × 25,000 × 1,800 = ₹9,00,000

This margin must be available in your account to continue holding the position on expiry day.