Options Trading in India
Trading in stocks isn’t easy. Trading success requires not only minimizing risk but even more importantly maximizing reward. In reality, options give you some of the best ways to increase your returns with minimal capital invested.
Options are some of the best examples of the magic of leverage i.e. doing more with less.
For example, instead of buying a hundred shares of Tata Steel for Rs. 57,500(rs. 575 per share current market price), one can pay Rs. 3000 and buy one lot of tata steel stock options expiring 31st December 2020 and get economic control over a hundred shares for just five percent (1/20th) of the stock price!
What is Options Trading?
how to do options trading in India:
Options are a derivative instrument, which means that all fluctuations in the options price are dictated by the changes in the price of the underlying security. In this example, the changes in the price of tata steel stock (the underlying security) directly affect the changes in the price of the options.
Factors for Profitable option trading:
- A good options broker is key to winning the options game. It is not, just about the lowest commission per trade.
- Though obviously an important factor in maximizing your profits, a secure and user-friendly platform with access to up-to-date price charts
- other analytical information is a must.
- In addition, the margin provided by your broker will play a critical role in deciding your eventual profits from every successful trade you have.
Top Options Trading Platforms:
Based on these criteria, we’ve reviewed the top 2 options trading platforms in India for investors:
Though the overall platform is pretty great, their customer service and back-end support leave a lot to be desired.
They are Mumbai based discount stockbrokers who started almost at the same time as that of Zerodha and offer a similar commission structure as them.
Upstox has two brokerage plans (Priority charges are Rs30/order).
With a Basic plan, they provide 3x margin, and with a Priority pack, they provide 4x margin for options.
The Upstox pro is a powerful,feature packed app with rich data analysis functions
A late entrant to the discount broking industry, it has definitely put in the work to innovate into the hearts of traders. With only one branch in Bangalore, they have a countrywide app-based network of clients.
Charges are about rs 20 per order execution
And margins are on the lower side at 2x for options trading/selling (and 1.5 for buying options for near month nifty contracts)
They also have their own in-house trading platforms namely, FYERS ONE and FYERS Market.
Account opening is free at FYERS.