Futures margin is the money that is to be deposited and kept with the broker when you open a futures position. Understand it is not a down payment! It represents a smaller percentage of the notional value of the contract 3-12% per futures contract which can be up to 50% of the face value of the securities purchased on margin.
Enrich’s Margin Calculator is one of our popular offerings, it is a simple to use tool that has a very hygienic engine in the background. We will introduce you to the span margin calculator and help in understanding the margin requirement for the contract you are choosing.
The margin on one lot of futures will depend on a lot of factors. It is depended whether the contract is for the near month, mid-month or far month will make an impact. The margin will depend if the stock in question is volatile or flat. A volatile stock will attract more margins. Margins are impacted in case if the trade is normal, intraday (MIS) trade, or cover order. Let us simulate the different situations and see the impact of the margin simulation in all these situations. We will try to understand how to calculate initial margins for the futures and types of margins in the future contract within distinct futures margins. Initial Margin= SPAN Margin + Exposure Margin.
Buying Nifty near month futures
The margin simulation of the Nifty is the same irrespective of whether you are opting for long or short on the Nifty. Nifty currently has a lot size of 75 units, so the minimum notional value will be dependent on it.
Particulars Value
Normal margin is the combination of VAR margin and the Extreme loss margins (ELM). The ELM is also known as the exposure margin. Initially, only VAR was mandatory for SEBI has made it mandatory to collect the VAR and ELM margins as a part of the normal margins. In case if you want to pay a lower margin then it is better to opt for intraday trade. The intraday has strict guidelines if the trader does not close the trade then the broker RMS will close the trade automatically around 3:15 pm. If you want more leverage then you can go for Cover Order. In the Cover order, you put the stop loss as a part of the order and in that case, since the risk is limited still limited you get higher leverage. For the above instance, the trade can move from purchasing 6 lots in normal order to buying 21 lots in the intraday order and up to 62 lots in the case of Cover order. The normal margins are fixed by the exchange, the leverage amount to be given on the intraday orders and cover orders is something that the broker can decide.
Buying Bank Nifty Futures in the mid-month
The Margin simulation of the Bank Nifty is similar whether you are going long or short on the Bank Nifty. Bank Nifty has currently had a lot size of 20 units, making the minimum notional value of the contract dependent on it. In the case of the Bank Nifty Chart, the leverage potential is high since one can place a cover order. The futures are leverage and just as profits can multiply even the losses that can multiply. Indices are relatively less risky as compared to the stocks and hence, the margins are lower making the leverage higher.
Conclusion:
Margin calculator has many inbuilt features. The Margin calculator gives the spilled between the SPAN and exposure margin. A trade can choose the contract based on his choice based on the expiry date. The contract belonging to the present month is the Current Month Contract, The next month is the Mid Month Contract and the third month is the Far month Contract. On the expiry of the current month contract, a new far month contract is scheduled. In this, the mid-month contract would be transitioned to the current month contract. When the calendar spread technique has initiated the margins required are lower since the risk is reduced drastically.
