Margins and leverage at Zerodha
Margins and leverage at Zerodha are determined by the SEBI / exchange regulatory framework, not by Zerodha’s individual decisions. Post the peak margin rules of 2020-2021, the broker-driven leverage era ended; today, leverage is set by exchange margin calculations.
Leverage by segment
| Segment | Product | Approximate leverage |
|---|---|---|
| Equity delivery | CNC | 1x (full payment) |
| Equity intraday | MIS | 5x for most large-caps; lower for mid / small |
| F&O futures | NRML / MIS | 5-7x typical (SPAN + Exposure ~15-20% notional) |
| F&O options (long) | NRML / MIS | Premium-only (no leverage on long options) |
| F&O options (short) | NRML / MIS | 5-10x effective (SPAN-driven) |
| Currency futures | NRML / MIS | ~30x (low margin requirements) |
| Currency options | NRML / MIS | Similar to F&O options |
| Commodity (MCX) | NRML / MIS | Variable; ~5-10x for major commodities |
These are approximate; exact margins are computed via the Zerodha margin calculator .
What drives the leverage
Equity intraday (MIS)
VaR + ELM margin per scrip:
- VaR (Value-at-Risk): scrip-specific volatility-based.
- ELM (Extreme Loss Margin): exchange buffer.
- Total typically 15-25% of notional for liquid large-caps.
Leverage = 1 / margin ratio. For a 20% margin requirement, leverage is 5x.
Equity delivery (CNC)
No leverage. The buyer must pay 100% upfront. This is the SEBI upfront margin rule applied to delivery.
F&O
SPAN + Exposure determines the initial margin. The combined typically works out to 10-20% of notional, providing 5-10x leverage.
Hedged positions (multi-leg strategies) get reduced SPAN; leverage effectively higher for the strategy. See Hedged positions margin benefit .
Currency
Currency derivatives margins are much lower than equity F&O (~3-4% of notional), giving 25-30x leverage. This reflects the relatively low volatility of major currency pairs.
Commodity
Per MCX framework; varies by commodity. Gold / silver typically have higher margins than the agri commodities.
Pre-2020 vs post-2020 era
Pre-2020: Brokers offered 5x, 10x, 20x leverage for equity intraday via broker-extended credit. Zerodha specifically offered up to 20x.
Post-Phase-4 (Sep 2021): All retail leverage is exchange-determined; brokers cannot extend additional intraday credit.
For active intraday traders, this was a significant change.
SEBI’s framework summary
Several SEBI rules together define the margin landscape:
| Rule | What it does |
|---|---|
| Upfront margin | Cannot place order without margin |
| Peak margin | Must maintain margin throughout the day |
| 50:50 cash collateral | At least 50% of F&O margin in cash |
| Margin pledge | Pledge equity/funds as collateral |
| Direct payout | Settlement direct to demat |
Together these define how much capital you actually need to deploy for any trade.
Margin tools on Zerodha
| Tool | Purpose |
|---|---|
| Zerodha margin calculator | Pre-trade SPAN + Exposure for any contract |
| Margin required field on Kite order window | Live margin for active order |
| Margin available / used / cash on Kite funds | Your account margin status |
| SPAN and exposure margin on Kite | Component-level breakdown |
Margin shortfall
If your margin used exceeds available, you face a margin shortfall :
- SEBI penalty interest applies.
- Auto-square-off may trigger.
For details: Margin shortfall penalty notice .
See also
- SPAN and exposure margin on Kite
- Zerodha margin calculator
- Exchange margin types (SPAN, ELM, Adhoc, VAR)
- SPAN margin on Zerodha
- Exposure margin on Zerodha
- ELM (Extreme Loss Margin) on Zerodha
- VAR + ELM intraday margin on Zerodha
- Margin required on order window
- Margin available / used / cash on Kite funds
- Margin on exit calculation
- Delivery margin field on Kite
- Pay-in funds explained
- Option premium credit on Kite funds
- Collateral (equity) on Kite
- Collateral (liquid funds) on Kite
- Dashboard / funds calculation flow
- 50:50 cash collateral rule explained
- SEBI peak margin rules explained
- Upfront margin requirements post-2020
- SEBI margin pledge rules September 2020
- Direct payout to demat SEBI rule
- Margin trading SEBI new rules 2026
- Margin shortfall and auto-square-off
- Margin pledge (Zerodha)
- Margin haircut
- Hedged positions margin benefit on Zerodha
- Naked option selling margin on Zerodha
- Intraday leverages for MIS / CO
- Intraday margin increases on volatile days
- Cash component vs collateral component
- Futures and options
- Zerodha
- Kite (Zerodha)
- MCX (Multi Commodity Exchange)
External references
References
- SEBI, Margin and leverage framework for equity and F&O, circulars 2020-2024.
- NSE Clearing, SPAN, ELM, VAR margin computation, nseclearing.com.
- Zerodha, Margin policies, zerodha.com.