Yes. You can use the collateral margin available from your pledged holdings to buy options in FYERS. Up to 100% of the available collateral margin can be used for option buying.
If you use collateral to buy options and carry the position overnight, Late Payment Charges (LPC) are calculated on the collateral amount used. No LPC is charged if the position is closed on the same trading day.
How does it work?
You can use your available cash balance, collateral margin, or a combination of both to buy options. If collateral margin is used and the position is held overnight, LPC is charged at 15% per annum (approximately 0.041% per day) on the collateral amount utilised.
Example
Suppose you have ₹1,50,000 available as collateral margin from your pledged holdings. On Monday, you buy options worth ₹2,50,000, using:
- ₹75,000 from collateral margin
- ₹1,75,000 from your available cash balance
If you close the position on the same trading day, no LPC is charged.
If you hold the position overnight, LPC is calculated on the ₹75,000 used from pledged margin.
Daily LPC rate = 15% ÷ 365 = approximately 0.041%
₹75,000 × 0.041% = ₹30.83 per day
No LPC is charged on the ₹1,75,000 paid using your cash balance.
You can use up to 100% of your available collateral margin for option buying. If you carry the position overnight, LPC will be calculated on the collateral margin utilised.
Important
- You must have sufficient funds in your FYERS account to cover any trading losses. If sufficient funds are not available, you may need to add funds to continue your position or clear the debit balance. If the shortfall is not addressed, the position may be squared off, or the pledged securities may be sold at RMS discretion.
- When you use collateral margin to buy options and carry the position overnight, the amount payable for the option is adjusted against your available cash balance at the end of the day during settlement. If you have sufficient cash, your balance will remain positive and no Late payment charges (LPC) will be charged. If the available cash is insufficient, your cash balance may turn negative, and Late payment charges (LPC) will be charged on the resulting debit balance.
- If the value of your pledged stocks drops, your available collateral margin will also reduce. Positions may be squared off to cover any debit balance.
- If your account continues to have a debit balance for five consecutive trading days, you will not be allowed to use collateral margin for trading from the sixth trading day onwards. For example, if the debit starts on Monday and remains uncleared through Friday, you will not be able to trade using collateral margin from the following Monday until the negative balance is cleared.
What if...
| Scenario | Solution
|
|---|
| I close the option position on the same day | No LPC is charged for using collateral. |
| I use both cash and collateral | If the position is held overnight, LPC applies to the collateral amount utilised. |
| I use 100% collateral | You can use up to 100% of your available collateral margin. If the position is held overnight, LPC applies to the collateral amount utilised. |
| I have sufficient cash at the end of the day | If your cash balance is sufficient to cover the amount payable for the option, your balance will not turn negative and no LPC will be charged on a debit balance. |