Hedge Benefit on WebNotes

Required margin vs final margin on a Kite basket

Sun, 21 Jun 2026 00:00:00 +0000

On a Kite basket order , the required margin is the money Zerodha needs to place every leg of the basket, computed leg by leg before any offset, and the final margin is the smaller amount actually blocked in the account once the basket executes and the hedge benefit between offsetting legs and any written-option premium credit settle. The two figures appear side by side on the basket summary, and the gap between them is not an error or an extra charge: the final margin is the slice of the required margin that stays blocked after the net position is computed.

Hedged positions margin benefit on Zerodha

Wed, 20 May 2026 00:00:00 +0000

Hedged F&O positions on Zerodha enjoy reduced SPAN margin compared to naked positions. The SPAN engine recognises offsetting legs (long + short, long-call + long-put strangle, etc.) and reduces the worst-case loss scenario, resulting in lower margin requirements.

How hedge benefit works

The SPAN engine runs 16 stress scenarios across the portfolio. For each scenario:

Naked short call: large loss in up-scenarios.
Long call (hedge): gain in up-scenarios offsetting the short.
Net loss across scenarios is much smaller.

The SPAN margin reflects the smaller worst-case loss, giving the hedge benefit.

How to fix full margin required for hedged positions

Wed, 20 May 2026 00:00:00 +0000

When you set up a hedged F&O strategy and Kite shows the full margin (as if the legs were standalone), the hedge benefit isn’t being applied. The cause is usually the order in which legs are placed.

Conflict-of-interest disclosure. This guide is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this guide does not carry it and earns no referral commission from the procedure described here.