While trading indian option markets comparing to US option markets, there are lot of setbacks
In US for some of the trading apps like webull, robinhood etc 4% daily interest will be credited on the unused cash which is not the case in indian broking industry.
In the US stocks for the liquid stocks there are weekly expiries which is not the case in indian markets & 0 DTE expiries.
Finally the margins, Margins are very high during expiry days in normal days for straddle if it was 2.5 lakhs on the expiry days it was 3 lakh & some other option strategies double margin on expiry days like calendar spreads.
Despite so many flaws & SEBI frequent changes/Market manipulations in the indian derivaties still a good option to trade? i am really loosing interest and started exploring other markets
0 DTEs are heavily manipulated here and in the US, you have little edge there so why bother?
IMHO, the 8-10L lot size for stocks and lack of index ETF options are a bigger deterrent for responsible option trading than the relative lack of 0 DTEs.
This isn’t true. You have to move the cash to another account to get interest. And interest is tied to how much interest you have in the economy. It is like putting money overnight using liquid funds at Zerodha.
I know what you are saying, but this is the opportunity that exists for us. In the US, it is so much more competitive and tougher to make money, whereas in India, you have a higher probability of making money. But you need to adjust your trading strategy to market conditions.
This is very much true, if you have 10 lakh and use option straddle which costs around 2.5 lakh for idle amount 7.5 lakh interest will be credited daily in the US markets.
I think in US brokers will check end of day unused cash and settle the interest it will be ranging from 3.8 to 4% but in india it was 0% on the unused cash
Can you please elaborate your comment, it is like putting money overnight using liquid funds at Zerodha. I had no idea on liquid funds what you are referring
what about the higher margins on the expiry days for calendar spreads/straddles/ strangles it was too much higher margins on the expiry days.
I traded in US markets for 6 months, it was more or less same strategies that i used in india working in US markets as well it’s so easy actually there is so much liquidity there for 6 months, 1 year strike prices
it is so much more competitive and tougher to make money, whereas in India, you have a higher probability of making money (with new margin rules in F&O it is very tough actually to make money in india)
Yes, but you need to move remaining 7.5 lakhs to other account with same broker , similar like how checking account and saving account works. Robinhood will take a cut and pass rest to user, when client want to trade client again need to move money back, similar to Bank brokers in India.
Alternatively if one is option seller or futures trader, use idle amount to buy liquid funds, pledge them and get margin against them to trade, entire margin received via pledging liquid funds can be used for margin, only a 6% hair cut is applied. Meanwhile keep earning interest on these liquid funds,When ever user want cash can sell those pledged funds instantly and receive 100% of funds same day. Need a day though to withdraw as settlement is T+1 in India.
Broker can’t do anything in this case, these are rules set by regulator and everyone has to follow them.
Because our markets lack in depth and not liquid enough beyond immediate to next expiry.
In India, pledge margin is free (of course there is a haircut). So, even if the margins on F & O are high or higher, you can still earn (at least) about 6 to 7% per annum by pledging liquid funds, growth mutual funds etc. And, Webull etc give you interest of 4.10% APY (annual percentage yield). So, we have a better system, at least on this point.
The higher margins on straddles etc are upsetting our profit calculations since we buy fewer lots with our limited capital, which eventually lowers our overall ROI. This is actually a concern for option writers.
Also, we cannot get free leverage on our trading balances in India. That is a disadvantage.
However, you can get very good leverage (in India) if you trade cryptos.
