Can we offset Loss from Put hedge against Equity Portfolio?

Taxation
1

If an investor want to buy Dec put options (yearly expiry) as a hedge, can he offset his loss from the profit in equity?

Eg:

A person buys 1 crore worth of Nifty Index ETF.
To hedge he also buys around 5 lakhs worth of Nifty Put options (Dec expiry)

After 10 months, he earns a profit of 20 lakhs from Nifty Index ETF.
But he suffers a loss of 4 lakhs in his Put (due to time decay) that he has bought as an insurance.

His net profit is 16 Lakhs.

My question is, since F&O is considered business income and Equity comes under STCG, or LTCG, how can he offset his loss? Is it even possible?

@Quicko @Jason_Castelino

2

If this is in the same financial year its possible

1 Like
3

Business loss can be set off against any other head of income other than salary in the same year.

1 Like
4

Hi @Harshajyoti_Das,

Your F&O losses can be adjusted against all other incomes except salary in the same year. Hence in your case, the F&O losses will get adjusted against the capital gains.

1 Like
5

Thank you every one for your reply.