Sell PE vs Buy CE β Which is better when I want the stock at a lower price?
If I want to sell a PE (Put Option) or buy a CE (Call Option ) on a stock. I have a few questions about margin:
- How much margin is required to sell/write a PE before expiry?
- Does the margin requirement change as expiry approaches?
- If the stock moves against me (falls), does the margin increase automatically?
- What happens if I donβt have enough margin β will the broker auto-square off my position?
I want to know this from experts.
@Hardik @Tradehull_Imran sir
Well I am not an expert but I can guide you
- For selling a put option 1 lot of nifty 50 stock is around 1.2 lacs more in case of volatility
- yes margin requirement changes as it approaches near expiry to fulfill obligations and rights
- yes since you have sold put option stock can fall sharply RMS increases margin for better risk management
- Yes broker can close your position at anytime to manage risk mentioned in their policy.