Used margin is the amount of capital that is utilized for your executed equity intraday, F&O positional /intraday trading & delivery orders including your open positions.
When you place an order to buy stocks or securities, Zerodha requires you to deposit a certain amount of money as a margin. This margin acts as a security deposit or collateral, ensuring that you have enough funds to cover any potential losses that may arise in the market.
The used margin determines the amount of money you can invest in the market. If the used margin exceeds the total available margin limit, Zerodha may issue a margin call, requiring you to deposit additional funds to cover the margin shortfall. If you fail to do so, Zerodha may close out your positions to cover the shortfall, resulting in losses.
How to Check Used Margin in Zerodha
Step 1: Log in to your Zerodha account.
Step 2: Go to the “Funds” section. Under the fund’s section, you will see “Used Margin,” which will display the amount of margin that is currently being used.
Under the “Funds” section, you will find information like available margin, SPAN margin, and exposure margin. Let’s have a look at
Available Margin in Zerodha
Available margin is the amount of money that is available in your trading account after accounting for the used margin.
The available margin includes the benefit of pledging collateral, the premium received from shorting options, funds added during the day, the effect of realised profits and losses, and unrealised losses.
You can use the available margin to take new positions or cover your losses.
Available Cash Balance
Your current cash balance in your Zerodha account. If the available cash balance is negative, 0.05% per day or 18% p.a will be charged as interest on the negative balance.
Opening balance is the cash balance available in the trading account at the beginning of the day.
The funds added during the days reflect as payin balance.
Exchanges use the SPAN (Standard Portfolio Analysis of Risk) margin system that calculates the margin requirements for futures and options trading. It is a comprehensive margin system that considers various risk factors such as price volatility, the underlying asset, and expiration date to calculate the margin requirement.
The exchanges charge the exposure margin over and above the SPAN margin to cover risks that the SPAN margin may not cover. It is calculated based on the potential loss that can arise from the position if it goes against you. The exposure margin is usually higher for illiquid or volatile contracts.
The total amount paid to purchase options. This value will be negative if the funds are received for shorting or writing options.
Collateral Margin (Liquid Funds)
Liquid funds collateral shows the received from pledging Liquidbees ETFs or liquid mutual funds. You can use the collateral for trading purposes.
Collateral Equity Margin
Equity collateral shows the amount received from pledging shares or ETFs and can be used for trading purposes.
For F&O you need a 50% margin in cash or cash equivalents to use the equity collateral margin. Liquid funds collateral can be used as cash equivalents.
You can visit the support portal or call customer support to know about the haircut and how much leverage you can utilize. While calling customer support you must have a 4-digit “Support code” to authenticate your identity. If you don’t know about “Support code”, read our guide on what is support code in Zerodha for a complete understanding and how to get it.
How to Maintain Sufficient Margin in Zerodha
To maintain sufficient margin in your Zerodha account, you need to keep a close eye on your account balance, used margin, and available margin. Here are some tips that can help you maintain sufficient margin in your account:
- Keep track of your open positions and their margin requirements regularly.
- Avoid over-leveraging by not taking positions that require more margin than what you have available.
- Always maintain a buffer of funds in your account to cover any unexpected losses.
- Keep an eye on the margin call threshold and ensure that your available margin stays above it.
You can also read our latest article on Zerodha annual charges in which we have covered all the charges some of which you might be unaware of.
How to Understand a Daily Margin Statement
A daily margin statement is a report that provides a summary of your account balance, used margin, available margin, and other details related to margin trading. It also includes information about the trades that you have executed during the day, the margin required for each trade, and the margin available in your account.
To understand the daily margin statement, you need to pay attention to the following details:
- Account balance: The total balance in your account, including the unrealized profit and loss from your open positions.
- Used margin: The margin required for all your open positions.
- Available margin: The amount of money available for trading after accounting for the used margin and any additional margin requirements.
- Margin utilized: The percentage of your available margin that is utilized.
- Margin call status: Whether your account is currently under margin call or not.
Also, read our latest guide on how to invest in an IPO in Zerodha if IPO investment is what you are planning for.
Intraday profits are not made available for trading until settled by the exchange (i.e. on T+1). Profit would be added to your funds balance by next day.
You should monitor your used margin in Zerodha regularly, especially when you have open positions. You should also monitor your daily margin statement to ensure that you have sufficient margin to cover your positions.
If you don’t have sufficient margin in your Zerodha account, you may receive a margin call from the broker asking you to deposit additional funds to cover the margin requirement.
If you fail to do so, the broker may liquidate your position to cover the margin requirement, which could result in significant losses.
No, you cannot withdraw the used margin from your Zerodha account as it is blocked to cover the risk of your open positions.
The minimum margin required in Zerodha depends on the instrument and the exchange. Zerodha provides information about the margin requirements for each instrument on its website.