Education Series on Derivative Contracts
Two types of margins need to be paid to take up and
hold positions in the option segment. They are known as Initial margin
and Mark to Market Margin. While the initial margin has to be paid
up-front as a percentage of the value of the underlying before the deal
is struck, mark to market margin emerges daily when the contract is
mark to marketed and the same has to be paid on next day basis.
Failure to pay margins by clients will result into compulsory close
out of one's position as insisted by SEBI.