I was trying to trade a put bull spread with lot size=3000 and difference in strike price=Rs. 20. The maximum loss that I could have made in the worst case scenario is 20*3000=Rs. 60,000. However, margin calculator demanded Rs. 98,000 as the margin. How can the margin required be more than the maximum loss that I can incur?
The margin requirements are calculated by a software called SPAN by Omnesys, and the aren't based on worst case losses, but the entire portfolio. So, though it may seem weird that the required margin is higher than maximum loss, the system takes into account a few more factors while calculating this value than just the worst case losses.
