There has been a bull market in options trading for the past couple of years. Is it because of interest-free pledging available to sell options?
Why do we have an interest-free margin in Indian stock markets by pledging which can be used to take option trades but nothing like that is available in other markets around the world? Is this one of the reasons for India to have more people engage in option trading?
pay interest on what? we are not receiving anything to pay interest for.
when we pledge something for trading we are not getting any fund from broker. broker simply telling exchange this person has given something that can be converted to cash incase of loss and he coudnt pay.
Which is why we cant buy option from pledging because it needs cash that have to be paid to writer of option.
but we can write option bcos we receive money from buyer of option so writer paying nothing here.
We can buy options using pledged margin. Not with zerodha but with certain other broker(s).
Most of the other businesses & SMEs have taken a knock. These people are now active on trading platforms, I am one of them !
if broker paying from their pocket then its technically loan against stock/instrument isnt it?
is it interest free? and which expiry they allow, only weekly or any expiry?
I remember a time when i could sell a nifty/banknifty option with 1500 rupees & buy options with 20x leverage!
Dont get confused, hold on to your original thought - that is correct.
The other brokers who are offering buying power on pledge is not something thats good for the trader in the long term.
When we pledge margin is provided by the clearing corporation and not the broker. Broker charges interest only if there is a shortfall in client account which can happen in both option selling or buying if there is a M2M lose. As you may know M2M in option selling can quickly go much above the premium collected if market moves against you.
Any expiry option is allowed.
Besides those who denounce option buying never operated for meaningful amount of time within the profitable contours of option buying.
10 lots in 2019 had much less contract value than 10 lots now. Indices are now at much higher levels.
bull market in options trading in India is likely due to a number of factors, including Interest-free margin, growing retail participation and positive market sentiments.
How can the option buyer turn time value loss in to an advantage?