I think money transferred to you by friend can be treated as gift , better to fund from relatives account if any
Can not express how relieved I was to find this whole thread and figure out that I really need not re-invent the wheel ! So My situation -
- Worked last few years in the US and trading in US with the money earned here … Lost big shorting Tesla
but now doing fairly ok - Now returning to India, and willing to take up US options trading as a resident Indian … well, technically only game I play is selling cash secured puts and sometimes selling covered calls … NO Margin
- Now that I am returning, I opened two accounts as non-US resident ( First-trade and Charles Schwab ) and transferred money from current US accounts … NO LRS
Question : Is there anything here for RBI or FEMA to take an objection with ? And yes, I totally intend to pay capital gains taxes in India …
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You are not violating any FEMA rules and not using any margin. So, it should be fine.
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Thank you !
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Hello Nifal… if you have income generated from abroad… don’t you have to remit the same to India first? I have a software development company and wanted to know if I can have my client send money to an account that I open in USA and then open a margin account? Thanks
Would like to highlight a recent E-Mail sent by Tastyworks, a US Broker to all the margin account holders based out of India.
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@all
I know one can open an US LLC and use it for trading.(even non US resident can do. Don’t have to be a US citizen)
Tasty works closed my dad’s(Indian citizen) individual margin account after one month of opening it.
Has anyone created an offshore entity and opened a US margin account on that entity’s name? Tried going through the thread for sometime but lost patience after reading 200+ comments.
Thank you!
How will the US LLC be funded from India? If you remit money through LRS, that may be questioned in the future by RBI.
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@namitjain2890 @Ragavendran_V @lazy @nithin Hello all. Can somebody please help me with some information related to day trading in US market. I’m living in Chennai. My brother lives in SFO. Have one margin enabled TDameritrade account in my sister in law’s name (Will remove margin in few days since i have never used it). Funds in the account was transferred from her US bank account. I day trade long only options on 4 tickers aapl, tsla, nvda and spy. It’s a naked option trading. Buy call or put. if it hits SL, exit. or when market moves in my direction, i trail and exit. Rarely I do swing options on the same tickers. Would be grateful if somebody clear my following doubts.
- Can I keep day trading the same strategy when my brother and his family moved to india permanently?
- As my living depends on the income from trading US market, How does the withdrawal work?
- How about the tax filing?
- Is there any limit in growing the account?
Thanks in advance.
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no. Indians are allowed to have only cash account.
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After your family move to India permanently, you can trade everything that is allowed in cash account. I am not sure what is allowed by TD Ameritrade in their cash account. If they allow you to day trade options, you can continue doing it. You can continue using margin account if you want to. However, if the broker asks you to provide latest residential address proof, you may have to switch to cash account. See Namit’s post above for details.
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Withdrawal can be made if it is required for your immediate needs. That shouldn’t be an issue but it would be difficult to grow your account.
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Tax filing should be done by your sister-in-law as it is her account which is making profits.
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There is no limit in growing the account with profits. However, you cannot add funds by remitting money from India.
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@Ragavendran_V thanks for your reply.
Kindly check the above link. Clear cut explanations about day trading options and stocks in cash account. Have submitted a query on RBI website too regarding this. Let’s see.
Btw, got the following replies about cash account from tdameritrade customer care.
"Thank you for reaching out and I hope your Wednesday is well. These are great questions and I am happy to help clarify. Clients residing in India are restricted to trading in Cash, Covered and Long positions only. So you would not be able to trade spread options or Futures since margin is required to trade those. You would trade up to Long options which means you could still buy or sell option contracts.
If you reside in India, you are restricted to a cash only account. Therefore, you will not be allowed to take short sides of trades because you need margin privileges to sell short"
I can trade long options intraday with settled funds in cash account.
@namitjain2890 @nithin. I am an NRI studying in UK, is it legal for me to trade with a margin account in the US market, using my NRE bank account?
You can go through this thread, similar query was answered.
@siva. I have gone through a good portion of this thread,i could only make out that it’s illegal for indian residents to trade via a margin account in any of the foreign markets.
But for NRI’s, i am not very sure, there are comments saying yes we can trade with a margin accnt and then there are comments saying no you can’t.
I just want to know the final conclusion, can a NRI, trade with a margin accnt or not?
I am guessing you will repatriate the money back from your Indian NRE account to your UK bank account and then use it for trading. There is no Indian restriction in this case. You just have to worry about the laws in UK, if they allow you to trade margined products or derivatives in the US.
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Hi Traders,
I know that we cannot trade with margin in foreign exchanges. But can we buy options in US or other markets - I am aware of LRS scheme to send money there is a limit but no idea on any limit for withdrawal.
If we can buy options - can you suggest me any broker for same?
Need help.
Thanks,
Praveen
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You cannot use this money for trading derivatives because it involves margin and as per the guidelines of RBI, it is not allowed.
American option are a bit different there the option seller can deliver that shares any time between the settlement cycle say option is gonna expire on 30 july n it’s call option ,the option goes itm on 15 the seller of the call option will deliver you shares next day n you need to make make payment of whole contract 100* whatever price of the share
This is a great thing! Any way in India too , SEBI rules are making ,slowly Option sellers in to becoming option buyers. Thank you for the information.
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