Query about Currency Derivatives Options

Hi Guys. A little help required please.

I am of the view that Rupee might depreciate in the near term. Spot is 1 USD 64.3616. So if I am over the view that rupee would depreciate so i should buy a call option right?

Further, I was thinking to buy ITM CE of strike 64.25 which is at a premium of Rs 0.385. I just want somebody to correct me if I am thinking this right, 1 lot is 1000usd worth right, So i would have to pay a premium of 1000x0.385 = Rs 385 per lot right?

So If say I invested Rs 5000, total lots I can purchase would be around 13.

So if Rupee depreciate and goes up and premium goes up to 0.435, So is my calculation for profit here correct.
That is 0.435 - 0.385 = 0.05 X 1000 X 13 lots = Rs 650

Did i get it right? and also is currency derivative gives such minimum profits only? Like investing 5000rs and getting 650 rs on a 0.05 paise movement of premium.

Is there any huge volatility observed for a trader to earn a good amount? Or inveting 5000 rs in equity derivative makes more sense?

Kindly please help to clear my doubts. Please tag somebody who might be aware about Currency Trading. Thanks

@gopchem Can answer this querey

Today i took 10lots future of usdinr and margin blocked is around 12k… Every 0.005 increment would give Rs5 ( if you have 10 lot at 64.45 then 64.455 would give Rs 50 ( - brokage & tax ) ) !

For options others can help…


Yep ur calculations right. Getting 650 on 5k investment is like 12% isn’t :slight_smile: . I don’t know if you can call it minimum.

But yeah, currency doesn’t usually move as much as equity. Hence the margin requirement is also much lesser if trading futures. If you want volatility, equity is better bet.

Thank you guys.

Minimum tick size is .0025 but yes .005 increment would give x1000 ( contract size) = 5 rs.

But minimum increment will be 2.5 rs per contract per tick movement of USD.

I am a latecomer so missed the participation. Other members have already answered your query.

And yes, usually currency has low volatility that’s why margin requirement is low as told by Mr Nithin.

From a traders point of view, most of the people get bored up easily with currency. You can find more opportunities in intraday stocks. But yes risk is higher & so is excitement in stocks.
But if you can devote fulltime & focus only currencies, your success rate would go around 70- 80% overall. You will have a cleaner route to make money unlike intraday stocks which is very messy.

Thank you :slight_smile:

USDINR option buying is prudent when you expect immediate price movements,If it consolidated then option seller eat premium. Buy option before big events otherwise buying future is right option. With a margin of 5000 you can buy 4 lots USDINR fut.

What are your current view on entering long on 64.50 CE. Is it the right time to enter , if expecting a hike in fed rate.

I think you will get better price in enter say 20 to 22