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Why is higher than usual margin blocked for my F&O trades close to expiry?
Higher than usual margins are blocked for F&O trades close to expiry due to the physical settlement obligation in the F&O segment. As the expiry date approaches, the margin requirements increase as follows: – E-4 Day (Friday EOD): 10% of the applicable margin required – E-3 Day (Monday EOD): 25% of the applicable margin required – E-2 Day (Tuesday EOD): 45% of the applicable margin required – E-1 Day (Wednesday EOD): 70% of the applicable margin required – E-Day (Thursday): 100% of the applicable margin required This increase is implemented to account for the potential risk and volatility as the contract nears its expiry.
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