Low margin to keep F&O mkt volatile (The Economic Times 25th Jan 2008) What are margins in the equity derivatives segment? Margins are the funds that must be deposited with a clearing exchange, through a broker, for an investor to trade (or keep an open position alive) in the futures and options (F&O) segment. There are two types of margins: initial margin and mark-to-market (MTM) margin. Initial margin is the first payment that’s required to be paid out to open a futures contract. This margin is relevant to investors involved in the futures segment and options writers (sellers). Simply put, margin is the price of one lot size of futures contracts or for option writing. The initial margin, which is a percentage of the contract value, is specified by the exchange daily, subject to a minimum amount. For instance, if Infosys trades at Rs 1,000, one lot size of its futures contract is 200 units and initial margin is 20%, then the an investor has to pay Rs 40,000 (20% of 1,000 x 20...
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