Bad news for option traders

#Budget2016 STT on options to be increased from 0.017% to 0.05% #UnionBudget2016

how much will be the effect for nifty option traders?

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The three fold increase is not as bad as it sounds. Let me explain:

As a brokerage firm, less than 7% of the STT paid daily is from options trading. 93% is from futures which thankfully hasn’t been increased.

Even though exchanges declare notional option turnover ( strike + premium) x Qty, STT is calculated only on the option premium.

So if you buy 300 nifty options at Rs 100 and sold them at Rs 100, the premium turnover is Rs 30,000 + Rs 30,000. STT earlier would have been 0.017% of Rs 30,000 which is Rs 5.1, it would be now Rs 15.

So your earlier breakeven point only based on STT would Rs 100.017 whereas now it would be Rs 100.05. As an option trader, that is not much.

But damn, this sucks. Just the intent of increasing STT doesn’t hold good for brokerages and traders.


so we as a trader have to shell out 3 times more than what it is presently.

Yes looks like it, unless some miracle happens.

hello nithin sir,
how trader protest again increasing tax on trading
firstly service tax 12.36% then 15.45% and now more than 18
and now stt on option .

The problem in India is that less than 3% of the population pays direct taxes. Hence government I guess is forced to collect it indirectly, especially after all efforts to increase direct taxes being not successful. I am guessing our future is going to be where income tax might come down, but indirect taxes like ST/GST/STT etc going up.


brokerage firm like you and other , concern with finance ministry or not about taxes.
and all brokerage firms have any association or not

i think if indirect taxes increases(in future) than intraday trading not remain attractive and reduction in intraday turnover also hurt brokerage firms.
what is your view

Indian markets are shitty , trust me … compared to US markets…
there’re no liquidity in leap options too…
pathetic for investors and hell for scalpers …

Yes, market will be bullish, no doubt about that …
but rules and regulation are so pathetic … worse …