Margin Requirement for put spread

vijaykiranv · April 28

Hi,
I am trying to understand the margin requirement for placing a Nifty put spread using the Kite API. My goal is to utilise the maximum available margin in my account and place a put spread order for as many lots as possible, given my account balance.

My Approach:
I want to place the following spread:
* Sell: NIFTY2543024800PE
* Buy: NIFTY2543022850PE
Here’s what I did:
1. First, I checked the required margin for placing a sell order for one lot using kite.basket_order_margins. The margin required at this stage is approximately ₹2.63 lakh.
2. After placing the buy order for the lower strike, I see that the margin used drops to about ₹1.47 lakh.

3. However, the next day after both orders are placed, my account shows that the margin used has increased to around ₹1.83 lakh (with SPAN = ₹1.47 lakh + Exposure = ₹0.36 lakh).
* Initial Required Margin: ₹2,63,918.48
* Final Margin After Both Legs: ₹1,46,963.48
* Margin Used Next Day: ₹1,83,000 (approx; SPAN + Exposure)

I am unable to derive a consistent logic to find the final margin required to maintain a put spread position once it is open, especially to calculate the maximum lots I can trade with my available funds.
* How can I accurately determine the final margin required to maintain a put spread (after both legs are placed and positions are open)?

Note: I am aware of the requirement to maintain an extra 2% margin on expiry day and am already accounting for that in my code.

Would appreciate any guidance on this please.
Thanks!
Vijay

rakeshr · April 30

Margin Used Next Day: ₹1,83,000 (approx; SPAN + Exposure)

It's because of the change in required margin BOD(beginning of the next day margin file). This article explains in detail. I just checked for current required margins, and it's "total": 188533.8.

"final": {
    "type": "",
    "tradingsymbol": "",
    "exchange": "",
    "charges": {
        "transaction_tax": 0,
        "transaction_tax_type": "",
        "exchange_turnover_charge": 0,
        "sebi_turnover_charge": 0,
        "brokerage": 0,
        "stamp_duty": 0,
        "gst": {
            "igst": 0,
            "cgst": 0,
            "sgst": 0,
            "total": 0
        },
        "total": 0
    },
    "total": 188533.8
},

vijaykiranv · April 30

Hi @rakeshr, thanks for your response, that clarifies. Earlier I was not fetching it correctly.
I hope this is the file (https://api.kite.trade/margins/basket) we need to refer and add final span and exposure to get the final margin required for a spread?

I've now checked for SELL:NIFTY2550824900PE and BUY:NIFTY2550822850PE, got the below total margin.
Final SPAN Margin: ₹151246.5
Final Exposure Margin: ₹37388.700000000004
Final Combined Margin Required: ₹188635.2

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Margin Requirement for put spread