Prayag
August 28, 2020, 7:10pm
70
@nithin I had a doubt about this. I came across a post on a different thread that mentioned that Interactive Brokers allowed buying options (and deploying certain other options strategies) in the cash account. The poster was also skeptical if this was in accordance with LRS. After that, they asked Interactive Brokers multiple times, who confirmed that it was in compliance with LRS. Given that Interactive Brokers has done their due diligence on this matter, would you suggest it is all right to go ahead with it?
The post I am talking about -
I think since many people are interested (already got a few DMs), i’ll just name the broker. I spoke with Interactive Brokers some 4-5 months back. First they had listed the types of options that can be traded in Cash accounts by Indian residents, I thought they wrongly just copy pasted the US page in India, and honestly it was copy pasted. But then I called then and confirmed twice, and reminded them about LRS. They still said we are aware, you can do everything that’s allowed in a Cash account. I checked FINRA rules, and they mentioned Options are allowed in cash account, where the entire risk is covered, so cash secured puts and covered calls are obviously allowed. I think even LRS would’t restrict that. For vertical spreads they mentioned that the option has to be European styled cash settled, so I found only SPX and may be a few other indices that fit that criteria.
This research was done some 4-5 months back and was very limited so I did not save links to my research. I’ll try to find those rules and post it here. I think the FINRA rules can be easily found. Not able to find the page on IB’s website as there website is a mess. Apart from the homepage, the entire website is a mix of Indian and US pages. Navigation is difficult.
Edit: Just went through IBs website, they have changed a few things with navigation. Will try to find it.
Edit: Good luck. I forwarded this page to someone months back, whatsapp had it backed up. here’s the IB link,https://www.interactivebrokers.co.in/en/index.php?f=38144&p=tradingrequirements