What is the minimum amount required for Options Trading in India?

  • Asked By
  • 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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Categories: Option Trading
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Discussion (3)

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.

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.

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