Enhancing buying power by pledging ideal securities

You can avail margin by pledging shares which you have already bought and present in your Demat account and use it as collateral. This facility gives you extra buying power and you can increase your return on investments. If the stock price increases, then you will have extra leverage to buy your desired shares for the required quantity.

Using this margin pledge, you can buy various types of securities except for Options. You can click the following link to check the margin required for various securities allowed by Flattrade. https://flattrade.in/margin-calculator

Let us take a look at different scenarios with the help of examples

Case 1:

Let us assume you have a fund balance of Rs 100. Your margin pledge security value is Rs 1 lakh. Now you plan to buy 100 shares of Reliance shares trading at Rs 2000 in the cash segment. In this case, if you place an NRML order for 100 Reliance shares trading at Rs 2000, the order value will be Rs 2 lakh (100 shares x Rs 2000). This order will go through once you place it based on the shares pledged from your Demat account as you have 2 times leverage facility in Flattrade.


Case 2:

Let us say you want to buy or sell 1 lot of Nifty 50 Futures by pledging shares present in your Demat account. You have a balance of Rs 1000. The security value of shares for the margin pledge is Rs 1.5 lakh. The margin required to buy that 1 lot is Rs 1.1 lakh. In this scenario, if you place an order to buy or sell that 1 lot of Nifty 50 Futures, the trade will go through.


Case 3:

For buying Options contracts, you require full cash as margin pledge is not allowed according to the terms and conditions of Flattrade. However, you will be able to write an Options contract, i.e., sell Option contract, if you have the necessary margin. Let us assume you want to sell 1 lot of Nifty 50 Options contract, and the margin required is Rs 1,08,000. If the value of your pledged securities Rs 1.5 lakh, the order placed will go through. Please use the above link for the margin calculator as the required margin amount varies based on the strike price.


Moreover, these rules are applicable to all derivative products including currency and commodities. In addition, as a client of Flattrade, your daily mark-to-market amount must be paid by cash as the price fluctuates. Normally, you have to pay the difference debit amount within T+1 day, where T is the transaction day. If the amount is not cleared, then Flattrade reserve the right to sell the securities that have been pledged and cover the debit amount within two days after the transaction day.

To read more about NRML in the equity segment, click here