1. What is the new additional margin requirement for expiry days?

Effective 20th November 2024, an additional 2% Extreme Loss Margin (ELM) is applicable on all short (sold) index option contracts on their expiry day. This applies to both intraday and overnight positions, regardless of whether they are hedged or unhedged.

2. Why is this additional margin required?

The additional margin accounts for the higher volatility typically observed on expiry days, reducing counterparty risk and safeguarding against abrupt price movements.

3. How is the additional margin calculated?

The formula for additional margin is:

Additional Margin (per lot) = 2% × Strike Price × Lot Size

Example:

• Strike Price: ₹25,000
• Lot Size: 25
• Additional Margin: 25,000×25×2%=₹12,500

4. Does the additional margin apply to positions taken before expiry day?

No. However, if you take a position on Expiry Day -1, the 2% additional margin will apply on expiry day. This may cause a margin shortfall even if there is no MTM change in your position.

5. What happens if there is a margin shortfall on expiry day?

If there is a margin shortfall, Navia will be forced to square off such positions during the first hour of trading on expiry day to ensure compliance with regulatory requirements.

6. How can I check my margin requirements?

You can check your margin requirements through:

• Order Window: Displays estimated margin before placing a trade.
• Funds Menu: Shows margin utilized and available funds.

7. What should I do to avoid margin shortfalls?

Ensure sufficient funds are available in your Navia account to meet the updated margin requirements, especially on expiry days.

8. Does this rule apply to both weekly and monthly expiries?

Yes, the additional 2% margin applies to both weekly and monthly expiries of index options.

9. What are the current weekly and monthly expiry of various contracts?