What is the minimum amount required for Options Trading in India?
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- Updated On:26-May-2021
- Replies:4
Short Answer
Options are of two types- call option and put option. You need quite an amount of money to trade in options because it has costs such as premium, brokerage. etc. To know more about the topic, read the detailed version.
Detailed Answer
Introduction to Options trading:
- Options are a form of conditional derivatives policy that allows the holder to buy or sell the principal asset at a predetermined price before or after the agreement expires.
- The sellers pay a "premium" to option buyers in return for this right.
- They will purchase a call option on this asset and sell a put option on it. A ‘call option' is one that allows you to buy an option that will help you buy shares later, while a ‘put option' is one that allows you to sell an option that will allow you to earn securities later.
Minimum amount requirements for options trading:
An individual who is interested in Options trading needs to have at least premium amount in addition to other charges that will be levied and brokerage. You must have enough margin money in your account to acquire an option as the risk bearing is quite high, as determined by your brokerage and trade.
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Discussion (3)
Options trading, especially options buying can be done with a capital of even Rs 1000. However, the probability of making money from purchasing options is extremely low. But you can implement hedged strategies like 'Iron condor', 'Bull put spreads', etc where the margin requirement is low at around Rs 40,000 per lot, and generate decent returns.
There is no exact amount for investing in options. But then you would need a limited amount based on the "Lower Circuit" of the options contract. Anything greater than the value of the lower circuit can be invested into options trading. Based on the trend, the prices could fluctuate anywhere from 3 rupees to 200 rupees per lot.
To withdraw money from your Zerodha trading account, you need to place a withdrawal request by logging into Zerodha Console. Withdrawal of money is completely free. As per regulations, the withdrawal money will be credited only to the bank account which is mapped with Zerodha.
Public Provident Fund Scheme is a saving scheme that comes with tax benefits. Ministry of Finance introduced this scheme in the year 1968. The main objective of PPF is to encourage general people to mobilize their small savings. The interest offered on these schemes are not taxable. Precisely, PPF is an investment with non-taxable returns.
Yes, one can invest in the share market with 100 rupees. So, you can start investing with as little as Rs.100 only. Isn't that interesting? There is no reason as to why one can’t invest in the stock market for 100 rupees.
Zerodha is the best broker for options trading in India because of the minimal per-order charges, advanced tools for technical analysis, features for placing a stop loss, bracket orders, and many more.
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.
Wise is one of the cheapest ways to send money internationally as compared to other available options in India. The only limitation of Wise is that it does not integrate with e-commerce online payments.
Zerodha Kite is the best app for options trading in India. It is the preferred option among all traders due to its superior features and tools.
Discount brokers have gained a lot of popularity in the past couple of years. Zerodha is currently India's largest and most trusted discount broker which is also the best option for beginners. It has all the necessary qualities required for a good broker like low commissions, low-maintenance charges, high-quality trading terminal, etc.
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.
The Mirae Asset NYSE FANG Plus ETF Fund is a good option for Investors who want foreign exposure. The Equity allocation is very concentrated to just 10 stocks which makes this ETF very volatile and risky. This ETF consists of the top 10 stocks in their respective sectors mostly TECH, like Amazon, Netflix. Facebook, etc. Hence Investors with high-risk tolerance and a long time period should consider this fund.
Akshat Pareek
There is no minimum investment required to begin trading options. It all depends on the type of contract, the option premium, and the expiry date. However, in order to sell options, you must have a substantial amount of money because the margin is very low, providing less leverage. Beginners should have at least 50k in their trading account to trade options.