The three margin components
Your broker blocks SPAN margin (for the scenario-based risk of your position) plus Exposure margin (an additional buffer on top). On expiry day, physical delivery margin may also apply for stock F&O. The headline SPAN figure you see on margin calculators is not the total — exposure typically adds another 30–50%.
Peak margin reporting
Since 2021, brokers report peak margin to SEBI four times intraday. If your margin utilisation exceeds the blocked amount at any snapshot, you are penalised — even if the trade closed moments later at zero net. Automated strategies that size to the edge of available margin routinely trip this. Leave 10–15% headroom.
Collateral vs cash
Brokers accept pledged equity, bonds, or mutual funds as collateral for F&O margin, after haircut. But a minimum portion — typically 50% — must be cash or cash-equivalent. For any strategy that holds options positions overnight, plan on at least 50% of blocked margin being real cash in the trading account.
A worked example
A short-strangle on NIFTY with strikes around 5% out of the money, one lot, two weeks to expiry: SPAN is around ₹45,000, exposure adds another ₹18,000, and the cash-equivalent floor means ₹32,000 of that must be liquid cash. A trader who plans on the ₹45,000 SPAN figure is going to fail a margin top-up request.
What this means for automated strategies
Automated systems should compute margin demand from SPAN + Exposure + a 15% peak buffer, not SPAN alone. And the account funding plan should treat 50% of that demand as a cash floor. Anything else is one volatile session away from a forced square-off.
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