What is margin in the share market? Intraday, delivery and F&O margins explained

Margin is the money your broker blocks from your trading account before it lets you take a trade. It is not a fee. It is a deposit that covers the loss your position could make, and it is released when the position is closed. How much margin you need depends on what you are doing: the full price for delivery, a fraction of the trade value for intraday, and an exchange-set amount for futures and options.

What margin actually means

In the video, Vikas defines margin in the plainest way possible: "trade lene ke liye kitna paisa chahiye" (how much money you need to take a trade). Everything else in this lesson is detail on top of that one sentence.

Two things beginners mix up:

• Margin is not the price of what you are buying. It is a deposit the exchange and your broker hold so that if the trade goes against you, there is money to pay for the loss.
• Margin is not brokerage. Brokerage is a charge you pay and never see again. Margin is your own money, blocked for a while and then unblocked.

Why does margin exist at all? When you buy shares and pay the full amount, nobody is owed anything. But when you control a position worth more than the cash you put down, somebody is carrying the risk that you cannot pay your losses. Margin makes sure that risk is covered before the trade, not after. In India the exchanges' clearing corporations set the minimum margin for every instrument. Your broker can ask for more than that minimum. It cannot ask for less.

Delivery margin: you pay the full price

Delivery, usually labelled CNC in a broker app, means buying shares to hold beyond today. At the time of writing, you pay 100% of the value on the day you buy. There is no leverage in a plain delivery trade.

Example: 100 shares of SBI at ₹500 need ₹50,000 in your account. The shares arrive in your demat account on the next working day, and there is no margin call and no time limit on holding them.

Some brokers offer a Margin Trading Facility, or MTF, for delivery. The broker funds part of the purchase, charges interest on that amount every day, and keeps the shares pledged. Treat MTF as a loan, because that is what it is. Interest keeps running whether the stock moves or not.

Intraday margin: a fraction of the trade value

Intraday, labelled MIS or similar, means you buy and sell the same shares within the same session and square off before the close. Because the position does not survive the day, the exchange only asks for part of the value as margin.

At the time of writing, SEBI's peak margin rules require brokers to collect at least the exchange's VaR plus ELM margin upfront. For most large, liquid stocks that works out to roughly 20% of the trade value, which means about 5 times leverage at most, and less for volatile stocks. Brokers used to offer 10 or 20 times on intraday. That is no longer allowed, and anyone offering it is not operating under Indian rules.

Example: an intraday position of ₹1,00,000 in SBI needs roughly ₹20,000 blocked. If you do not close it before your broker's cutoff, typically a few minutes after 3:15 pm, the broker squares it off for you and may charge a fee. If the loss during the day eats into the margin, the broker can square off early without asking. Types of trading explains how intraday differs from swing and positional.

F&O margin: SPAN, exposure and premium

Futures and options are where margin gets more involved, and where most beginner accounts get hurt.

Futures

You never pay the full contract value of a future. You deposit a margin made of two parts, SPAN and exposure, both set by the clearing corporation and revised as volatility changes. For index futures this has tended to sit somewhere around a tenth to a sixth of the contract value at the time of writing; check the exchange's current value before assuming anything.

Futures also settle every day. This is called mark-to-market. If the contract moved against you today, the loss is taken from your account tonight, even though the position is still open. If your balance drops below the required margin, you get a margin call: add funds or the broker closes the position. Exchanges also levy a penalty for margin shortfall, so running a futures position on a thin balance is expensive even before the market does anything.

Options

Buying an option is the one place in F&O where margin is simple. You pay the full premium and that is your maximum loss. Example: a Nifty call with a premium of ₹150 and a lot size of 75 costs ₹11,250, and nothing more can be taken from you.

Selling an option is the opposite. Your loss is not capped, so the exchange asks for SPAN and exposure margin much like a future. Option selling with a small account is how a lot of people find out what a margin call is. Options trading basics covers the buyer and seller sides properly.

Currency futures

In the video, Vikas uses a EUR/INR example. One lot on the Indian exchange is 1,000 euros, so a move of 50 paise in the rate is worth ₹500 per lot and a full rupee is worth ₹1,000, and the margin he quotes for that lot was a few thousand rupees. Those numbers change; check the current lot size and margin on NSE before relying on them. He also describes standard lots priced in dollars on overseas forex platforms. Note the rule for Indian residents: only INR-pair currency derivatives on NSE, BSE or MCX-SX are legal. Trading with overseas forex brokers, or funding margin forex accounts through LRS remittances, is not permitted by RBI. Also, RBI has tightened who may trade exchange-traded currency derivatives since 2024, and brokers may ask for proof of underlying exposure, so check the current position with your broker.

Worked example: the same ₹50,000, three ways

Say you have ₹50,000 and you are looking at SBI at ₹500.

1. Delivery: you can buy 100 shares. If SBI moves ₹5, you make or lose ₹500, which is 1% of your money. No margin call is possible.
2. Intraday: with roughly 20% margin, ₹50,000 could control about ₹2,50,000 of stock, which is 500 shares. The same ₹5 move is now ₹2,500, or 5% of your money, in either direction.
3. Futures: an SBI futures lot is fixed by the exchange. Suppose it is several hundred shares and the margin is around 15% of the contract value. That margin alone could be more than your whole ₹50,000, meaning you cannot take even one lot. That is not a failure. It is the exchange telling you the instrument is too big for the account.

Vikas gives a capital rule in the video that fits this example: use only 10 to 15% of your capital as margin for a trade and keep the remaining 80 to 85% untouched. The point of the spare capital is not to take more trades. It is to make sure one bad day does not end the account. Position sizing and the 1% rule turns that into a formula.

What happens when you cannot pay

A margin call is the broker asking you to add money because the margin in your account has fallen below what the exchange requires. If you do not add it in time, the broker closes enough of the position to bring you back within limits. If the loss is bigger than your balance, your account goes into debit, and brokers charge interest on debit balances. Peak margin penalties from the exchange are added on top.

None of this is the broker being unfair. It is the system working as designed. The mistake is treating the margin the broker allows as a target to fill.

Common mistakes

• Thinking margin is the cost of the trade. It is a deposit, and the loss can be bigger than the deposit.
• Using all available margin. Vikas's 10 to 15% rule exists because margins go up when markets get volatile, exactly when you can least afford it.
• Forgetting mark-to-market on futures. A position can be "still open" and still have taken money out of your account.
• Assuming margins are fixed. Exchanges revise them, often before events and expiries.
• Confusing option buying and selling. Buying has a capped loss and no further margin. Selling does not.
• Chasing high leverage on overseas forex platforms. It is not permitted for Indian residents, and the platforms sit outside Indian regulation.

Key takeaways

• Margin is money blocked from your account so your losses are covered, not a fee and not the price of the trade.
• Delivery needs the full amount. Intraday needs roughly 20% at the time of writing. F&O uses exchange-set SPAN and exposure margins, and option buyers pay only the premium.
• Futures settle daily. Losses leave your account every evening the trade is open.
• Keep most of your capital free. A margin call arrives at the worst possible time.
• For currency trading, stick to INR pairs on Indian exchanges.