---
title: "Why is the entire margin required to enter into a hedged position?"
description: "The full margin is required when you sell (short) options or execute futures before placing a buy hedge position. However, you can reduce margin…"
category: arrow
subcategory: mtf-and-margins
slug: why-is-the-entire-margin-required-to-enter-into-a-hedged-position
canonical: https://support.arrow.trade/arrow/mtf-and-margins/why-is-the-entire-margin-required-to-enter-into-a-hedged-position/
---

# Why is the entire margin required to enter into a hedged position?

> The full margin is required when you sell (short) options or execute futures before placing a buy hedge position. However, you can reduce margin…

## Short answer

The full margin is required when you sell (short) options or execute futures before placing a buy hedge position. However, you can reduce margin requirements by placing the buy option orders before the future or short option orders.

## Order sequence matters

Higher margin approach: Selling options or futures first requires full margin until you place the hedge.

Lower margin approach: Placing buy option orders before futures or short option orders executes the hedge position with the least margin requirement.

## Example scenario

Unhedged position: The required margin to sell Nifty April futures is ₹1,06,899.21.

After hedging: The final margin required after hedging the sell position with a buy position is ₹44,198.38.

Learn more about optimising margin usage at market forums.com/t/benefiting-from-the-new-margin-framework-an-example/80658.

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Source: https://support.arrow.trade/arrow/mtf-and-margins/why-is-the-entire-margin-required-to-enter-into-a-hedged-position/
Publisher: Arrow / iRage Broking Services LLP