Margin management

Inorder to make money by selling options in consistent manner 

1. We need have high safety factor & sufficient cushion (sell low premium option strikes)  

2. Decent return - sell high number of lots - hence need high margin 

Hence to make the money we want - we need to ensure there is high margin money in disposal. hence margin management is very essential and one need to know the trick to pick trades that requires less margin - hence more lots can be purchased

1. Always take trade on both sides to reduce margin- selling 1 call and 1 put nifty is 1.1 lakhs while selling 1 call or 1 put alone will need 0.85 lakhs which means if we take on both sides it will lead to risk mitigation as 1 side will always be profitable for us and also reduction in margin

2. Margin reduces as we go farther in OTM- hence try to take as far strike price possible to reduce the margin 

3. Farther the expiry - lesser the premium - options of same strike between the expires -  Closer expiry as low margin as the probability of expiring in ITM within shorter time is low compared to that next expiry    

 - typically at the same time because if we defer taking position on the other side, it might lead to decrease in premium which makes it less lucrative to take position or market may go in opposite direction from the premises which we decided to defer the second leg