Zerodha Peak margin Hedge

Peak margin on hedged positions

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Peak margin reporting for hedged F&O positions uses the hedge-adjusted SPAN, not the standalone SPAN of individual legs. This is consistent with hedged positions margin benefit .

How peak margin treats hedged positions

The clearing corporation’s peak margin snapshot reads the portfolio SPAN at the snapshot moment:

  • If positions are properly hedged at the snapshot: hedge-adjusted SPAN applies.
  • Lower margin required.
  • Less likely to trigger shortfall.

Risk if hedge is broken

If one leg of a hedge is closed (intentionally or via partial fill):

  • The remaining position becomes effectively naked.
  • SPAN spikes from hedge-adjusted to standalone.
  • Peak margin snapshot may catch the unhedged state.
  • Shortfall risk increases.

Practical advice

For multi-leg strategies:

  • Don’t close hedge legs unilaterally without considering the SPAN impact.
  • If reducing position size, scale both legs proportionally.
  • Monitor margin after each leg change.

See also

External references

References

  1. SEBI, Peak margin and hedge methodology, sebi.gov.in.
  2. NSE Clearing, Peak margin computation, nseclearing.com.

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