Margin  in case of cover order is charged to the extent of maximum possible loss that  you may incur plus an additional margin calculated as % on the premium amount  for the underlying. Margin at the time of Order placement is calculated as  {Weighted Average Price (WAP of fresh order - limit of cover order) * Quantity} + {(WAP of fresh order * Quantity) * additional margin %}. This margin is adjusted  further based on the actual execution price.

Assume you take a buy cover position for the fresh order of  25 quantity at current market price of Rs. 100/-. Simultaneously you also place  the sell (stop loss order) of 25 quantity at trigger price of Rs. 95/- and  limit price of Rs. 90/-. Additional margin % defined is eg 10%.

In this case margin amount would be blocked as  {(WAP of fresh order * Quantity)* Additional Margin %} + {(WAP of fresh order - limit of cover order)* Quantity}.

Illustration:

In case the Additional margin % is 10%

Margin Required:  (100*25)*10%) + (100-90)*25) = 500/-

Please note that the above margin will get adjusted based  on actual execution price. Currently the Additional Margin % defined is 0.8%  which is subject to change based on the internal risk criteria decided by  AxisDirect team from time to time.