SPAN Margin
SPAN Margin is the risk-based margin a seller must post to write options, calculated from the worst-case loss of the position.
What SPAN Margin Means
SPAN (Standard Portfolio Analysis of Risk) margin is the risk-based collateral an option or futures seller must deposit. Rather than a flat percentage, SPAN simulates a range of price and volatility scenarios and charges margin equal to the largest projected loss across them. NSE also adds an exposure margin on top as a further buffer.
Option buyers pay only the premium and need no margin. Option sellers, who carry open-ended risk, must post SPAN plus exposure margin to cover potential losses.
How Spreads Reduce Margin
Because SPAN evaluates the whole portfolio's worst case, hedged positions need far less margin than naked ones. A defined-risk spread — such as an iron condor or bull put spread, where a long option caps the loss — attracts a fraction of the margin of a naked short option. This margin benefit is a core reason traders prefer spread structures.
SPAN Margin in the Indian Market
Selling a naked Nifty or BankNifty option can require well over a lakh of rupees in SPAN plus exposure margin per lot, while the same position hedged into a spread may need only a small fraction of that. Margins also rise when India VIX spikes, since the scenarios SPAN tests become more extreme. Quintal Mind's position tools help you see exposure per lot when planning short-premium trades.
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