Options Basics
Margin
The capital your broker blocks to let you hold a position — and why sellers need far more of it than buyers.
Definition
Margin is the money a broker blocks as collateral to cover the risk of a position. It is not a fee — it's held against potential losses and released when you close the position.
Buyer vs seller
- Option buyers pay only the premium — no additional margin, because their risk is capped at that premium.
- Option sellers (writers) must post margin, because their risk can be large or open-ended. This is typically SPAN + exposure margin on NSE.
Why it matters
Selling options is capital-intensive: a single short strangle can block a large margin even though the premium collected is small. Margin also changes with volatility — it rises when markets get turbulent, which can force position reduction at the worst time. Always size around margin, not just premium.
Plan trades with the full picture
Build strategies on TradePulse and see the structure and risk before you commit margin.