How does one many money in small value options

[TraderRavi]

On a serious note, even if you buy @ 2 and sell @ 2.3 - 2.4 you will get profit with many brokers like zerodha, rkglobal etc.....
with zerodha brokerage is 20 per order.....so you can buy 20 lots @ 2 and sell @ 3....1000 profit...after tax etc 850 profit....
now be wiser...

 

[Kaboooooom]

Lets assume i am paying rs 25 per lot, which would mean rs 50 for one buy n sell. Assuming i bought a call or put at rs 5 (lot value 250) and then i sell for a 20% gain at rs 6 (lot value rs 300). I would still not make any profit. Whereas if the prices were rs 50 and rs 60 respectively, i would still pay same brokerage but a profit of rs 450. This does not make sense, and yet daily small value options are traded in the tune of thousand of crores.

 

[munde_77]

Hi,
Perhaps this is a total nincompoop question and I dont know the basics. I have been trading futures for a while and am new to options. Havent had the patience to go through any options FAQ or tutorials. However I need quick explanation about one thing -

As I see options brokerages are are fixed per lot instead of percentage. The straightforward way I see to make profits is buy Call on rising market and buy Put on falling market. Lets assume, I do that right. However, at about Rs 110 charge per lot per transaction, I cannot understand how can one make money on small value options yet I seem them being traded HEAVILY. Ill elaborate, Lets say I bought a Nifty Call or Put at value Rs 10 (so lot of 50 will be Rs 500) and I will pay additional Rs 110 for it. Then I sell it for 30% profit at Rs 13 (so selling lot value will be 650) and I will pay additional Rs 110 on this transaction. So even after a whopping 30% gain, my actual numbers are - Profit Rs 150, Brokerage charges Rs 220. Total Rs 70 loss.
Whereas If I was doing the same for high value options, Rs buying at Rs 100 and selling at Rs 130, I would have still paid same Rs 220 brokerage but my profit would have been Rs 1500.
I dont see, how this works, can anyone please explain this to me.

Also, if I hold the options for a few days, do I get some interest or something or do I pay interest, what is the interest field in options?

Thanks for your patience guys, I will read up the FAQs but I need the answer to this for motivation.

Brokerage in R.K.Global is RS 9 per Lot and RS 20 in Zerodha Per trader (any number of lots 10/20/50/100 or more.) STT and other expenses are very less on option. STT is calculated on premium and not on the turnover like future.

 

[bhoomy4]

Trading spirit. Hard to digest, the top trading options are always less than Rs 100 (mostly in the ranges of 30-70), and there are even Rs 2-3 value options in the top 10. All of these with humongous turnover.
Just look at this link for today's (or last working day) values - http://www.nseindia.com/content/fo/fomktwtch_OPTIDXNIFTY.htm

And even if I am paying extra brokerage with my broker, the others provide similar plans, most of them charge Rs 50-100 per trade fixed price per lot.

What is the point on quoting my whole question again and again , I am still none the wiser.

Someone, please clarify (my original question that is).

Thanks in advance.

Hi there,

A genuine question for which I too was searching an answer. I'm a beginner too and a recent convert to option trading. In fact I had a long chat with my broker(Angel) regarding just the very same question. i have been trading in options mostly buys for the last 3 days( after a lot of reading on options) and consistently made some neat profits. However I found out today that most of my profits were taken back by the brokerage, because I traded in low cost options and made multiple trades in lots of 10 each time. This (mis)calculation occurred because the manager had mistakenly told me on phone that they charge fixed rate per transaction, irrespective of the no. of lots. However it is not so with them. Luckily for me the conversation was recorded and he agreed to credit the diff in brokerage back to me.
But what to do in the future if I want to trade in these options. The only answer I can think of is change my broker to low brokerage firms like Zerodha which is mentioned quite frequently on this forum. I did contact them and am going to open accounts with them. However I am only apprehensive about their credentials and safety of my funds. Other than these two points I think this is the best solution as of now. We shall wait and see if any enlightened soul can enlighten us how we can trade in these options with our regular (reputed) brokers.

Regards

P.S Any testimonies for Zerodha by users? Please let me know. Thanx

 

[summasumma]

On a serious note, even if you buy @ 2 and sell @ 2.3 - 2.4 you will get profit with many brokers like zerodha, rkglobal etc.....
with zerodha brokerage is 20 per order.....so you can buy 20 lots @ 2 and sell @ 3....1000 profit...after tax etc 850 profit....
now be wiser...

:!

:cheers:

:hap2: