you cannot do margin trading , that’s what I have found out. Also in options only covered options are allowed.
The Pattern day trader rules is not applicable for trading in Index futures. Nevertheless there is no provision in FEMA to send money abroad for margin trading so Indian traders cannot participate in Global financial markets.
Haha . I know what reply you get.
no reply at all, lol
Few weeks more, the way we are doing is little different to others hence this delay.
1 Like
PDT only applies to margin accounts not cash accounts
what are you trying to accomplish?
Can’t we ever get to trade US stocks intra-day using cash account?
Hi namitjain,
I read the whole thread and thought you have the greatest knowledge about this issue, the question i have is whether we can trade options which don’t need margin account and are you currently trading this way, thanks in advance
From my understanding, yes. But I cannot guarantee legal issues, maybe I missed something. Plus, even if there were no issues, the limitations are too much. Probably only 1 or 2 indices can be traded that too while defining the risk. Trading Nifty is a much better cost effective option compared to going for a Cash account in the US.
1 Like
No, not allowed, derivative products are not allowed.
Siva, Cash account in the US allows some risk defined options since the entire risk has been paid for. Infact, there’s a reputable broker in India who opens a cash account in the US and I spoke to them and they said it’s infact legally allowed to trade in very limited options. I think you probably understood which broker I am talking account, Just don’t want to popularize it here.
Don’t popularize it, but can you tell me via dm or something? thanks!
namitjain,
Assuming that it’s allowed, why can’t we trade all options available, why only 1 or 2 index’s, cash related options are offered on all us companies.
thanks
US FINRA rules. The options have to be European Styled cash settled options. Most of the options in US are American style physically settled.
1 Like
Don’t think so, if anything is wring, can you can post it here,please.
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,
3 Likes
Irrespective of what any one says, trading derivatives in US stocks from India is NOT ALLOWED. I have an account with Interactive Brokers and they categorically do not allow derivative trading from that account. However, some form of margin trading is allowed in equities (never tried).
@sandepca we both have spoken to Interactive Brokers and have gotten different responses, so let’s not just come to a conclusion based on your experience, unless you have actually tried trading vertical spreads in SPX or any other European cash settled options or covered calls and cash secured puts and got rejected. There’s also FINRA rules and not just IB saying that they allow some options in Cash account. If LRS still disallows that then action should be taken against IB (They are a big broker, they probably checked the legality). This forum is to keep the discussion open and come to a conclusion based on hard facts.
I personally still don’t recommend going that route, because it’s too much trouble for too little, but someone might have a use for it.
2 Likes