What is the required and the final margin in a basket order?
In the basket orders, the Required Margin is the essential fund needed to enetr the order. It represents the margin without factoring in the hedge position.
For example:
Let’s say you sell one lot of Nifty 19900CE and one lot of Nifty 19500CE, costing approximately ₹2,00,000/-. In this scenario, the Required Margin stands at ₹2 lakh.
However, introducing a hedge position, like buying 2 lots of Nifty 20000CE, can alter the Final Margin. Suppose, due to this additional hedge position, your Final Margin decreases to ₹45,000/-. Here, the Final Margin is ₹2,00,000/-, but the Required Margin is ₹45,000/-.
It’s crucial to understand that Final Margin isn’t an extra margin but rather the amount blocked from the Required Margin once the basket order is executed.