Margin Calculator
What is Margin Calculator?
5paisa margin calculator is an online tool to help you calculate comprehensive span margin requirements for option writing/shorting or for multi-leg F&O strategies while trading in commodity, currency, F&O before taking a trade.
:ResetTotal Margin include two components.
- Span Margin - Minimum margin mandated by exchange
- Exposure Margin- Margin in addition to span to cover the broker risk
SPAN Margin is calculated using modeled risk scenarios and risk arrays. A client is required to adhere to this as it is decided by the exchanges. This amount is determined taking into consideration a set of algorithms. These algorithms help understand the need for the margin amount basis the total portfolio assessment of the one-day risk for a trader's account.
SPAN Margin is used across all the stock exchanges globally and is used to calculate minimum margin money required by the investor to cover potential losses.
What is Span Margin Requirement & how it is assessed?
Assessment of SPAN Margin Requirement
There are various parameters being considered when taking assessing the SPAN Margin requirement hence it varies for each security. The various parameters considered are mentioned below:
- Margin is assessed on the basis of underlying risks
- Margin is based on the historic volatility of the underlying asset
- SPAN Margin considers the worst case scenario to arrive at a minimum margin value
How to Calculate Margin/ How to use Margin Calculator
How to use margin calculator?
Steps to estimate SPAN Margin
- Select the Exchange you wish to trade on
- Choose the product type - Futures or Options
- Select the ticker symbol of the scrip you want to trade
- Select the type of trade - Put or Call
- Select the expiry date of your trade
- Choose the strike price in case of Options
- Enter the lot size of your trade
- Calculate your SPAN Margin
FAQs
-
SPAN Margin is the minimum margin requirement blocked for futures and option contracts as per the exchange's mandate.
-
The margin blocked over and above the SPAN to cushion for any MTM losses.
-
The Margin is calculated by the software - SPAN (Standard Portfolio Analysis of Risk) which is based on a sophisticated set of algorithms that estimates margin of each derivative position to its worst possible one-day move.
-
Total margin = (SPAN + Exposure) - Premium received-Hedge benefit
Margin required to be overnight position using product type as DEL, Margin required to take intraday position would be 50% of Total margin for equity, Commodity and currency using product type as INT.
-
For delivery contracts leverage is given as per Span+exposure as mandated by exchanges,5paisa offer 10X margins on intraday option writing on expiry and 5x on normal days.