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How do delivery margins change before the expiration of an option contract?
To keep you safe, Indian stock exchanges use safety nets so you don’t lose more money than you can afford. As your trade gets closer to its end date (expiry), the required deposit (margin) goes up every day. This is done to help you avoid risky situations and unexpected losses.
| Day (Beginning of Day) | Margin Applicable |
| E-4 (Expiry Day – 4) | 10% of delivery margin |
| E-3 (Expiry Day – 3) | 25% of delivery margin |
| E-2 (Expiry Day – 2) | 45% of delivery margin |
| E-1 (Expiry Day – 1) | 35% of the total contract value |
| Expiry Day | 100% of the total contract value |
[Contract value = Spot price X Lot size]
The calculated delivery margin includes the SPAN Margin, Exposure Margin, and Additional or Adhoc Margin.
The Three Layers of Safety (Margins):
Total Margin Required = SPAN + Exposure + Additional or Adhoc Margins (if applicable)
· SPAN Margin: The basic minimum required by the exchange
· Exposure Margin: A buffer kept for emergency situations, like sudden market swings
· Additional Margin: Extra margins required by the exchange due to market volatility
If there is any market holiday during expiry week, the deadlines will move up.
For example, if the day before expiry is a holiday, the margin requirements for that day will move to the previous trading day.
Important: Check your “In-The-Money” (ITM) stock options and make sure you have enough margin in your Share.Market account before the deadline (expiry). If you don’t have enough funds, Share.Market will automatically close your positions to prevent you from being penalized.
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