How much money do you need to begin Options Selling?

Short Answer

Option Selling requires large capital. Due to this many small retail traders resort to option buying where the margin money required is very less. Although with various strategies you can reduce your overall risk and margin required in Options selling. Know more about how much money is required to start option selling. The difference in the margin money required for selling a naked Option vs Selling a Hedged Option here.

Detailed Answer

What is Options Selling?

Options selling is a part of Options trading where a buyer and seller of an options contract are involved. Both the parties (Option Buyer & Option Seller) have the obligation to buy or sell the underlying security on the date of expiry at the pre-determined price. For example, the option seller of a Call option is under the obligation to sell the underlying on the date of expiry at a specified price. In the same way, a seller of a Put option will have to purchase the underlying security from the put option buyer on the date of expiry.

How much money is required for Option Selling?

Option selling can be done in two different ways:

  • Selling Naked Options
  • Using Multi-Leg Options strategies

1. Naked Options

To sell naked options (options that are not hedged by a contra position) the margin money required is higher as compared to using options strategies like Iron Condor, Short Straddle, etc. In the naked option selling the minimum margin money required to sell one Lot of Nifty ATM (At The Money) Call option is Rs 95000 approximately. This figure can change depending on the underlying stock or Index. An ATM Call option of Reliance Industry will require Rs 1,20,000. This might provide you with an idea of how much capital is required to sell one Lot of options. Naked option selling is preferred by extreme high-risk-loving traders as the return is more when compared to a hedged strategy. On the other hand, the maximum loss that you as a naked option seller can incur is unlimited/uncapped. Therefore it is always wise to use a hedge against naked option positions.

2. Using Hedged Option strategies

Using multi-leg option strategies or using hedged positions is always recommended for traders as it caps the maximum amount of loss that you can incur. In option selling, the seller faces the threat of unlimited losses in case your view goes terribly wrong. To prevent this from happening you can use multi-leg option strategies that will cap both the profit and loss in any situation. Another benefit of using a hedged position is, the margin requirement to take the trade is substantially less. Where you have to maintain approximately 1.5 Lakh to sell 1 Lot of Naked option, a hedged position will require less than half of that. An Iron Condor in Nifty will require approximately Rs 44000 to implement. This is way lesser than that of selling a Call option in Nifty which costs almost twice.


To conclude it can be said that with a capital of 1.5 to 2 lakh, you can start option selling with 1 Lot. Although you should maintain some extra margin to make adjustments to your position. This will prevent you from incurring unnecessary margin calls or losses if your view goes wrong. Using hedged positions is always recommended while trading in options. Not only it reduces the margin requirements by more than 65% but also protects you from any oversized losses.

Tagged With: Options Sellingmargin moneyDerivativesOption Tradingmargin BenefitMulti Leg Option Strategy
Categories: Option Trading
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Discussion (2)

Options are a concept which entices many traders since it requires very low money to trade. However, option selling is a very different niche and may require a considerable amount of money. Since option selling requires a high amount of margin so it is usually very costly and may range from 1.2- 2 lakhs. Therefore, it is always recommended to start options selling with a good amount of money.

The minimum capital required for selling options might be around Rs 50,000 for hedged strategies, but it is essential to have some extra margin in case of any adjustments. Also, you should remember to exit the short option positions first and then exit the buy positions. By doing this, you will make sure to prevent any margin penalties in case your unhedged option selling position is open at the time of squaring off.

Related FAQs
How to become a profitable Options Trader in India?

With the increasing exposure of the stock markets, more and more people are trying a hand in options trading. Options trading have become a lucrative place for individuals to earn money. The reality is certainly different. More than 95% of individuals lose money in Options trading, There are various reasons behind this. Find out the reasons for losses and the steps by which you can be a profitable options trader here.

What to not do when trading Options?

Options trading offers many options to traders, investors as well as hedgers. There are some common mistakes that option traders commit. Five of the most common mistakes are, taking too much leverage, not having a pre-defined stop loss and target, acting on tips on social media, adhering to buying options, and taking unhedged trades.

How much money can you make as an Options Seller?

Option Selling can be considered as a full-time business for traders. Similar to a business, you cannot expect extraordinary returns in options selling. You, as an options seller have an edge over option buyers and the chances of making money are higher. Know how much money can be made by selling Options.

Which is the simplest options strategy for beginners?

Options trading can be done in diverse ways. You can trade Options in unhedged or Naked positions as well as use multi-leg strategies to limit the losses. An endless combination of options can be used to put together a strategy. This can get complex sometimes. But many simple Option strategies can be used by Beginners. More of such strategies are discussed here.

What is an Iron Condor trade in options?

An Iron Condor is a 4 legged hedged option strategy that includes selling 1 slightly OTM (Out of The Money) Call as well as 1 Put option and, buying 1 Slightly Far OTM Put & 1 Call options in order to cover the risk of the Naked short positions. This strategy is implemented when the overall outlook of the underlying asset is neutral or rangebound and no major moves in any direction are anticipated. The maximum profit and loss are capped in this strategy, and by hedging, margin benefits can be enjoyed.

What is the Best strategy for Options Trading?

There are many complex Option Trading strategies out there but the most profitable are some of the simpler ones. The top 3 of them are Long & Short Straddles, Long & Short Strangles and Bull/Bear spreads.

Should you start Options Buying with a small capital?

Options Buying requires a lot of skills and effort from the trader. It is not easy to generate profits using Option buying. Many factors work against Options Buying. Let's look at some of the factors and find out if it's a good idea to start Options Buying with small capital.

How much money is required for Options trading?

Options trading involves two aspects. One is options buying and the other is options selling. To buy an ATM option you will require around Rs 10,000 to Rs 25,000 per lot for an Index or stock option. On the other hand, you will require close to Rs 95,000 to Rs 1,50,000 for selling 1 lot of index option. These amounts change with respect to the time remaining to expiry and other market conditions.

Which is better platform Sensibull or Opstra for Option Traders?

If you're looking for a straightforward and comprehensive take on options trading, then Sensibull should do the job perfectly. However, if you're and expert and want more complex trading tools, then Opstra is the one to choose.

Why is Options Trading considered risky?

Options trading is different from traditional share trading in many ways. Trading in options includes multiple factors like high leverage, delivery obligation on the date of expiry, unlimited loss potential, etc. All these factors make trading in options riskier.