What are all the reasons for peak margin penalty charges?
The scenarios below are when the client gets a peak margin penalty. Scenario 1: Client X bought Nifty at 13000 by 09:15 AM and sold it at 13200 by 11:00 AM. So the profit is 50 X 200 = 10,000. The penalty will be applied If the client uses the same MTM for taking a position again on the same day. A penalty will be implied here as your profit only falls on T1 Settlement but you are using it by T day. Scenario 2: When you book a profit on the options premium of a position taken on the previous day, a position that you have carried forward for a long time, or the profits booked on a future's position. Assume Mr. X has taken an option position 4 days ago and also has a booked profit on a carry forward future position, and he closes them both. He then uses the option premium and realised MTM of the future position on max broker leverage. Penalty imposed = [Option premium (closed position) + Realised MTM (Closed Future position)] Scenario 3: Mr. X buys a call option and hedges it by selling another put option with a different expiry. A hedged position will have a specific margin benefit, i.eHe or she needs to pay only 60% (approx) for the total of the 2 positions taken. If he or she closes the LONG call option position, he or she loses the hedging margin benefit, peak margin is implied, and a penalty is imposed. The above scenario is applicable for futures as well.