Can I use the Options premium received to open new F&O positions?
When you exit your long/buy option positions or enter new write/short options, the proceeds or credit of option premium can be used for only new long/buy option trades on the same trading day and only within the same segment (proceeds from equity options can’t be used for currency or vice versa).
You can use this proceeds or option credit for all other types of trades only from the next trading day.
Let's understand this with examples,
Case 1 -
You have sold Options and received a premium of Rs 1 lac. Assuming you have ₹ 50,000 apart from this in your account, you bought 2 lots of NIFTY FUT the next day in NRML at 1,20,000. Since the premium is not yet realised, while reporting your margins to the exchange, we'll not be allowed to report the option premium value. So you will be charged margin penalty on the shortfall amount of ₹ 70,000 (1.2 lacs - 50k)
Case 2 -
You have sold Options and received a premium of Rs 1 lac. Assume you want to buy 100 shares of Reliance at 1000 the next day. You will only be allowed to buy the quantity after the applicable haircut. Let's say the Haircut % on reliance is 12.5%. So, you will be allowed to purchase 87 shares of Reliance (1,00,000 - 12.5% / 1000).