Previously in this column, we discussed how managing a long position in an in-the-money (ITM) index call is different from managing a long position in an ITM equity call when the option approaches expiry. This week, we look at how delivery margins impact the contours of a bull call spread on an index and on an underlying stock.

Delivery margins

All equity options are delivery based whereas index options are cash-settled. Should you keep the position open at expiry, you are required to take delivery of the shares against the long ITM equity call. Your broker does not know whether you will keep your ITM equity option position open till expiry or whether you will close the position earlier. Your broker will levy a delivery margin starting four days before expiry till the expiry date in anti

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