unclear about initial and minimum margin in options trading?
April 24th, 2008
tiruvenganna r asked:
hi,
i m from india
can anyone tell me - the difference between mimimum and initial margin - in options trading.
hi,
i m from india
can anyone tell me - the difference between mimimum and initial margin - in options trading.
also , can i sell my futures contract before the expiry date ?
i think indian traders better know the difference between america and euro stock exchanges.
DAVID
yes, you can sell your futures contract before the expiration which is what you would do unless you want to take possession of the commodity.
futures or certain trades with options on futures require initial margin to put on a trade. to keep your trade you need at least minimum margin (generally less than initial margin) or the brokerage will liquidate your position without your knowledge. if you want to hold your position you would need to deposit more funds, generally a bad idea since it indicates you were wrong when you entered your position.