When trading options, you'll hear a term called "margin." It's nothing but the money required to buy or sell an option. Margin requirements are different for futures, call options and put options. They are also dynamic and change with volatility. Knowing how margins are calculated is important when trading options because it helps you deploy and manage your capital appropriately.
In this video, we look how margins are calculated for simple directional trades and when you hedge positions.
Learn more about margins here: https://zerodha.com/varsity/chapter/options-m2m-and-pl/
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