How to calculate margin using the Zerodha SPAN calculator
The Zerodha SPAN margin calculator at zerodha.com/margin-calculator is the standard tool for estimating the funds required before initiating a futures or options position on the NSE or BSE. This guide explains how the calculator works, how to read its output, and what the regulatory margin components mean.
For background on how margin works in the F&O segment see F&O segment on Zerodha and Margin pledge mechanics.
What SPAN and ELM mean
SPAN (Standard Portfolio Analysis of Risk) is a margin methodology developed by the Chicago Mercantile Exchange and adopted by Indian exchanges. SPAN calculates the worst-case one-day loss on a portfolio under 16 market scenarios that combine price and volatility moves. The exchange updates SPAN parameter files (called risk parameter files or RPFs) intraday, typically at 11 AM and after market close.
Exposure margin (ELM) is an additional buffer over and above SPAN, collected by the exchange to cover risks not captured by SPAN, including gap risk at opening. For index contracts, ELM is 3 percent of the notional value; for stock contracts it is generally 5 percent or higher depending on volatility.
Total initial margin is SPAN + ELM. This is the minimum margin required to initiate and hold a position overnight (NRML product code). If the margin in the account falls below the maintenance margin (typically SPAN alone, without ELM), the broker issues a margin call.
SEBI’s peak margin reporting rule (effective 1 September 2021, mandated by SEBI circular dated 1 December 2020) requires brokers to capture margin at four random intraday snapshots taken by the exchange and report the highest (peak) margin value. Clients must maintain peak margin in their accounts; shortfalls attract a penalty of 0.5 percent per day up to a maximum of 5 percent of the shortfall per instance.
Step-by-step procedure
Open the Zerodha margin calculator
Go to zerodha.com/margin-calculator/SPAN/ in any browser. The URL fragment /SPAN/ lands directly on the SPAN tab, which covers equity F&O. Other tabs on the same page include Commodity (MCX), Currency (CDS), Equity (for equity delivery and intraday), and Exposure (for pledged-collateral haircut calculations).
No Zerodha login is required. The calculator is publicly accessible and can be used to plan trades before funding the account.
Select the exchange
The SPAN tab has sub-tabs for NFO (NSE Futures and Options), BFO (BSE Futures and Options), and others. Most retail traders use NFO, which covers Nifty, Bank Nifty, Nifty Midcap Select, and the hundreds of stock F&O contracts approved by SEBI. BSE’s BFO has its own set of contracts, including the Sensex and Bankex options.
Add a position
Click Add Position. A form row appears with the following fields:
- Product type, Futures or Options.
- Symbol, the underlying (for example, NIFTY, BANKNIFTY, RELIANCE, INFY).
- Expiry, the contract expiry date. Nifty and Bank Nifty now have weekly expiries (Thursdays and Wednesdays respectively after the October 2024 rationalisation), plus monthly end-of-month contracts.
- Strike (options only), the strike price from the dropdown.
- Option type (options only), CE (call) or PE (put).
- Net quantity, enter a positive number for a long (bought) position and a negative number for a short (sold/written) position. Quantity is in lots, or in shares depending on the interface version; confirm against the lot size shown in the Kite options chain.
- Buy/Sell radio, some calculator versions use a buy/sell radio button instead of sign convention. Use the correct one.
Add remaining legs for a strategy
For a multi-leg strategy such as a bull call spread, iron condor, or straddle, click Add Position once more for each additional leg. The calculator’s engine reads the exchange SPAN files and calculates the net margin for the entire portfolio simultaneously, applying spread benefits where the exchange grants them.
SPAN spread benefits reduce total margin when the portfolio contains offsetting positions (for example, a bought near-month future against a sold far-month future on the same underlying). These benefits can be substantial: a short straddle on Nifty attracts significantly lower SPAN than the sum of two isolated naked short options because the combined position has limited net delta.
Read the margin breakdown
After all positions are added, the results table at the bottom shows:
| Component | Meaning |
|---|---|
| SPAN margin | Worst-case loss under 16 SPAN scenarios |
| Exposure (ELM) | Buffer over SPAN (3% index, ~5% stocks) |
| Total initial margin | SPAN + ELM, required to open position |
| Premium (options bought) | Cash paid out at execution; not margin |
| Total funds required | Initial margin + premium for bought options |
For short options, margin is charged and the premium received is credited to the account (but only the net balance after deducting the required margin is freely available).
For long options, no margin is charged. The full premium is debited immediately. The calculator shows this as a premium outflow, not a margin.
Switch between NRML and MIS
Toggle to MIS (Margin Intraday Square-off) to see the intraday margin. Zerodha offers MIS margin of approximately 50 percent of NRML on most F&O contracts. MIS positions must be squared off before 3:25 PM IST or Zerodha’s RMS (Risk Management System) squares them off automatically. Failing to square off incurs an auto-square-off penalty of ₹50 per order.
MIS margin is NOT approved for intraday peak margin purposes the same way as NRML, the peak margin snapshots capture the gross risk and MIS clients can still receive shortfall notices if a snapshot is taken when the position is open but margin is at MIS levels rather than NRML.
Verify against available funds
Log in to Kite and open Funds. The Available margin figure includes cash margin plus any haircut value of pledged collateral (see Margin pledge mechanics for how pledged securities contribute). Ensure available margin exceeds the total margin shown by the calculator, plus a buffer for intraday mark-to-market losses.
The calculator margin is as of the current SPAN file. SPAN parameters change intraday; the actual margin charged when you place the order may differ slightly from the pre-trade estimate.
Interpreting spread margin benefits
When two opposing positions on the same underlying appear in the calculator together, SPAN awards a spread credit. The exchange updates spread priorities and spread rates in the risk parameter file. The calculator shows the “spread margin benefit” as a deduction from the combined SPAN requirement.
Common spread positions that earn margin relief:
- Calendar spreads (long near-month futures, short far-month futures on same underlying)
- Vertical option spreads (long call spread, long put spread)
- Strangles and straddles, partial offset because the combined delta is lower than either leg in isolation
What can go wrong
- Calculator margin differs from Kite margin at order placement. SPAN parameter files update during the trading session; the calculator uses the most recently uploaded file, which may be from 11 AM when markets have moved further. Always treat the calculator figure as an estimate.
- Position size exceeds freeze quantity. The calculator accepts any quantity, but the exchange rejects orders above the freeze quantity limit. Check the freeze quantity on the NSE website or the Zerodha margin calculator’s lot-size note before entering large sizes.
- Available margin shows higher than actual. Pledged collateral appears as margin but carries a cash component rule: at least 50 percent of the total margin must be in cash or cash equivalents. If the cash component falls short, the broker blocks collateral from being used for the full amount.
- MIS position not squared off. MIS positions auto-squared off at 3:25 PM at market price attract an auto-square-off penalty.
- Weekly expiry confusion. After SEBI’s October 2024 circular limiting each exchange to one weekly expiry per underlying, some expiry codes changed. Confirm the correct weekly expiry before selecting in the calculator.
Related guides
- How to trade futures on Kite (first time)
- How to trade options on Kite (first time)
- How to understand peak margin penalty
- How to interpret the margin shortfall SMS
- How to use basket order for multi-leg options
- Margin pledge mechanics on Zerodha
- F&O segment on Zerodha
References
- SEBI Circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2020/198 dated 1 December 2020, Peak margin reporting by clearing corporations and stock brokers.
- NSE Circular NSE/FAOP/43907 dated 20 October 2021, Implementation of peak margin in the Derivatives segment.
- NSE SPAN risk parameter file documentation, available at nseindia.com/products/content/derivatives/equities/spannotes.htm.
- Zerodha support article: “What are SPAN and Exposure margins?”, support.zerodha.com.
- Zerodha margin calculator, zerodha.com/margin-calculator/SPAN/.
- SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2024/120 dated October 2024, Rationalisation of weekly index derivatives contracts.