Budget update for option traders, finally no STT trap on options

#1

Finally, after years of pushing for it, no more STT trap on options which are exercised. :slight_smile:

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So, if your ITM option strike of say 11800 gets exercised on expiry with the spot at 11900, at present you would have to pay STT of 11900x75x0.00125 -= Rs. 1,115.

But now it will be (11900-11800)x75x0.00125 = Rs 9.375 STT

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Is it true that STT trap has been removed in this budget?
#2

Great News. Would it be effective immediately?

#3

We will have to wait till SEBI issues a circular on this.

#5

Does this mean SEBI and Exchanges has to get this operational by 1st sep?

I mean… SEBI dont have a choice here, right?

#6

Writers are disadvantaged😔

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#7

can you please explain how ?

#9

What to explain what is your doubt?

#10

how writers are affected by this ?

#12

Writers are not affected by this by the way stt is a tax and it’s not paid for writers stt is same for both long and short options

#13

How ?
I see premiums to stay little higher which is good for them and I don’t see any -ve things for the sellers

#14

Right now say bank nifty expires at 31972 and I have written 32000 pe the option buyer won’t exercise it as stt is more than option value… Even if there is a 1re gain the buyer will exercise it always… And the stt of 30rs is split during last 5 mins between buyer and seller… Now buyer won’t need to split any :slight_smile:

#15

Premiums should be higher by 10 to 15 rs for atm strikes hopefully

#16

Now premiums will be usually higher or lower ?

#17

Seller will get more premiums when selling now …

Also currently stt values will get adjusted from 1pm onwards , like 31400 call 31600 put will be less than 200 arnd 2.15pm onwards

#18

This was a much needed steps which would remove lots of inefficiencies from weekly options. Options writers were enjoying lots of advantages because of this insane STT.

Now, it would level the playing field between writes and buyers. Additionally, directional strategies like debit spreads would become more practical.

#20

when this coming into effect

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#21

Hi @nithin @siva
Pls advise. I am new to options.

I bought Nifty 11500 PE 25Jul expiry 2 weeks ago. Now this option has become ITM. and I intend to hold the contract till expiry;

If Nifty ends below 11500 on 25Jul, is there any STT related issue I need to be aware of? Or is to better to square off my position on or before Thursday

Thanks!