Hi,
Lets say I have a directional view on Nifty spot market for Intraday.
But I'm confused whether to trade Nifty Futures of Nifty Options for that particular day.
I want to trade four lots of Nifty (Futures/Options).
I do know that there are few advantages and disadvantages associated with each asset type over other like below. (Correct me if I'm wrong).
Advantages of Futures:
1. There is no Time decay. (This will not benefit me as I'm day trading)
2. More liquidity
3. Same margin for long and short entry.
Disadvantages of Futures:
1. High transactional cost.
2. Even after high amount of STT collected while making a trade, we again have to pay taxes on profit. (I assume it is around 15%?)
3. Not suitable for Intraday
Advantages of Options:
1. Low transactional cost
2. More volatility (It can also be seen as disadvantage)
3. Less capital required for Long entry when compared with same qty to trade in futures.
Disadvantages of Options:
1. Less liquidity
2. More capital required for option writing (Anyway I will not do option writing)
3. Income tax is 30% on profit without any slab.
4. Time decay and many factors involves in the price determination. (Although the impact will be less for day trade i guess?)
I have highlighted few points which are the main concern for me.
Kindly guide me on the above perspective and give your inputs if I missed anything.
Thanks a lot!!