If a client creates an option strategy by writing options with the same strike price, will they receive hedge benefits or be able to use the premium credit for further option writing?
No, if a client creates an option strategy involving writing (selling) options at the same strike price, it will not be considered a hedged position. As a result, the client will not receive any hedge margin benefit. Additionally, the premium received from selling options in such a case cannot be utilized for writing more options. The premium credit can only be used for buying options, not for further option selling.
Common FAQ's
- Can I use the premium/margin from selling my carry-forward Options position for other trades on the same day?
- Why can’t I use the funds from selling my carry-forward Options position for trading in Futures or Cash segments on the same day?
- What happens to my In-The-Money (ITM) stock Options on expiry day?
- What benefit do I get after selling shares from my demat on the same day (T day)?
- How is the limit against Sell given?
- Can I trade in Options and Futures on Expiry Day?
- When will my position be squared off due to losses?
- If a client creates an option strategy by writing options with the same strike price, will they receive hedge benefits or be able to use the premium credit for further option writing?