#span margin calculator

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Span margin calculator tool help traders to calculate margin requirements for NSE listed assets and Nifty, bank Nifty span and exposure marg

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How to calculate Net Present Value (NPV)?

In finance, the net present value is the combination of the present values of the investment cash flow as well as the return or withdrawn cash flow. A discount rate should be entered, which is the desired rate of return. The results are declared in terms of a dollar which can be very beneficial. Positive results generate a higher rate of return on the investment. It enables people to continue investing.

During investment negotiation, net present value calculator will denote how much of the initial investment amount a person can adjust to achieve the desired rate of return.

Apart from the cash flow, users have to set five other values, such as:

1.       Initial investment – It includes the first amount that a person has invested. The value will be entered as a negative number.

2.       Discount rate – It is the rate of return that an investor wants to earn on the investment.

3.       Initial investment date – The date of commencement of the investment.

4.       First flow cash date – The first date mentioned in the cash flow grid.

5.       Cash flow frequency – It is used to set the initial dates in the grid. Dates can be changed many times while entering the cash flows.

At least one negative value and one positive value (investment return) are required for the PV calculator to give relevant results.

NPV is the calculation used by investors to check whether they are paying too much for investment relative to the desired rate of return. A negative value means the initial investment is too high for investors to meet the rate of return. If the value is positive, investors can pay an extra amount towards the investment, still earning what they desire.

What is the SPAN margin?

It is the minimum margin required for blocking the futures and options contracts as per the rules of the exchange. The margin is calculated by the software named Standard Portfolio Analysis of Risk (SPAN) which is based on a set of algorithms for derivative positions to the worst one-day move. The SPAN margin requirement is assessed on the parameters as mentioned below:

·         Underlying risks

·         Historical volatility of the underlying asset

·         Consideration of the worst-case scenario for arriving at the margin value

The main inputs are strike prices, risk-free interest rates, changes in volatility, change in the prices of underlying securities, and decrease in the time to expiration. The span margin calculator can shift the excess margin on existing positions to new ones or those short of margin.