When you place basket orders on Kite, you see two types of margin in the basket window:
- Required margin refers to the funds you need to place your basket order initially.
- Final margin refers to the actual funds that get blocked in your Zerodha account after your basket order executes.
The final margin represents the actual amount blocked from your required margin after execution. It is not an additional margin you need to add.
When you place a basket order for options spreads, you initially need the full required margin. However, after execution, only the final margin gets blocked because:
- You receive premium when you sell/write options
- This premium reduces the actual margin requirement
- The system calculates the net position and blocks only the necessary funds
Example scenario
Suppose you place a basket order for a Nifty options spread:
- BUY NIFTY 14th AUG 24350 CE
- SELL NIFTY 14th AUG 24500 CE
You need ₹50,343.68 as the required margin to initiate this order, but only ₹38,913.68 gets blocked as the final margin.
Required margins if orders are placed separately
- BUY NIFTY 14th AUG 24350 CE
- SELL NIFTY 14th AUG 24500 CE
The total margin required to execute these orders separately is ₹2,31,766.42, but after hedge benefit, the required margin is ₹50,343.68. As you hold a short option position, you receive a premium of approximately ₹11,430. The system uses this premium to offset your margin requirement, bringing the final margin to ₹38,913.68.