Buying foreign equity options under LRS

F&O
1

Hi I read somewhere and it is my understanding that buying options is not a margin trade since you have no compulsion to buy/sell the underlying equity. And if the option is in the money, the exchange can use the investors cash to do a buy and sell. Can somebody explain me whether this line of reasoning is right ?

Also if the flow of buying and executing an option does not involve margin, would it not be permissible under LRS ?

Disclaimer I am pretty new to this topic

2

Hi Shubham, you can go through discussion in this thread, will help you: Trading Derivatives in USA from India

2 Likes
3

Hello Shubham,

LRS is for transferring money out of india and if you do not do that to fund the account, the officials cannot question you because the money did not go from india.

Buying options is not considered a margin trade provided you did not buy the option premium using margin however selling options might be considered a margin trade