Can the product type of the hedged position be converted?
The product type of the hedged position can be converted (MIS to NRML and vice versa) one leg at a time. However, as soon as the product type of a particular hedged position is converted, the margin benefit of the hedge will no longer be available, and the required margin will increase for the intraday and the overnight positions.
- A client has bought Nifty long futures and Nifty short call option contract using MIS product type and received the margin benefit as it’s a hedged position.
- If the client converts only one position to NRML, i.e. overnight, the margin benefit will no longer be available, and the required margin will increase.
- However, if both positions are converted to NRML, the client will continue to receive margin benefits.
MIS index options buy positions cannot be converted to NRML. To learn more, see
Why can’t index option buy positions be converted from MIS to NRML?