@nithin just tweeted this really fascinating topic about the level of leverage in US & Indian economies and shared the rationale as to why the comparison itself is flawed. I’m resharing the tweet below:
It’s ridiculous to see people comparing options trading volumes in India and the US and claiming that we’re overleveraged. For starters, the comparison itself is flawed. People often look at the number of contracts traded, not the premiums or the actual value involved.
If anything, India is significantly less leveraged than the US, even taking into account the fact that our markets are 15–20 years behind theirs.
Consider this: in the US, the margin funding market (the equivalent of MTF in India) recently crossed $1 trillion. In India, it’s still under $10 billion—just 1% of that. Similarly, US stocks shorted are estimated to be another $1 trillion, while in India, the stock lending and borrowing market remains practically insignificant.
Calling the US a gambling society wouldn’t be unfair. Just recently, there were bets totaling $210 million on whether Zelensky would wear a suit at the NATO summit.
If you compare our leverage as a country to that of the US, we’re a mere drop in the ocean. Gambling runs deep in American culture. From the stock market to sports, casinos, events, lotteries, prediction markets, and crypto, you can bet on anything
So this constant narrative that we’re somehow dangerously overleveraged, just because of the number of options contracts traded, feels… well, misguided.
Link to the post on Zelensky:
What are your thoughts on this topic, Tqna folks?
