ETF that deals i derivatives

[Prayag]

@2percent_trader

Is it not legal in Indian market or just that any firm has not started it yet?

I had come across article which mentioned that Benchmark AMC (now Nippon Life India Asset Management Limited) had applied for Nifty Inverse ETF back in 2005-2006 but later withdrawn that proposal. A tweet claims that they couldn’t get permission for it back in the day.

Not available in Indian market but there is a Fubon Nifty -1 Inverse Index ETF (TPE:00654R) which follows the NIFTY50 PR 1x Inverse Index & a Fubon Nifty 2X Leveraged Index ETF (TPE:00653L) which follows the NIFTY50 PR 2x Leverage Index.

Also, these leveraged/inverse ETFs have some downsides. In case you are interested, these articles explain this in detail -

Dissecting Leveraged ETF Returns: Explanation, Components, and Examples

Why a short ETF won't protect your portfolio in a bear market - Monevator

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US market has a lot of ETFs which deal only in derivatives but it might be illegal for Indians to buy them, (as leveraged trades of any kind are not allowed for money sent outside via LRS). Nithin had also shared his view about this matter sometime back -

@nithin

@trader29

Now is it possible to only Buy call/put Options using a cash account? does that also be considered as margin calls as premium is paid upfront?

This is a grey area. US markets also gives you access to leveraged and short ETFs, even Crypto ETFs. Nothing explicitly prohibits these, but if you look at someone like Interactive brokers who are regulated by SEBI as well, they have blocked trading in all of these for Indians. So I am guessing their stance is based on their understanding of the local laws here. The brokers who allow trading in these are those who are currently not regulated by SEBI.

So yea, donno. But it is always better to take a conservative approach on these if something seems grey.