STT Option Trap

STT Option Trap

Fellow Traders In this month, I hope your trading has been good and profitable. As we near the expiry of the February contract, I would like to share with you an option of online trading trap that all traders must avoid during expiry. To keep it simple and short, if you buy an option (either call or put) and let it expire (that is you don’t sell it on the day of expiry and leave an open position) and your trade results in a profit, then you will be charged STT @ 0.125% of the settlement amount. Let me explain with a simple example. (By the way, STT is only levied on sell side for both futures and options) Suppose you were to buy 1 lot NIFTY Call @ 6000 for a premium of Rs. 20. On the day of the expiry, there can be two possibilities:- The option expires out of the money, that is Nifty expires below 6000. Let’s say Nifty expires @ 5950. Then the Call option is worthless and expires at Rs. 0. In this case, no STT is levied, as STT for option worth zero is zero. The option expires in the money, that is Nifty expires above 6000. Let’s say Nifty expires @ 6050. The the Call option is worth Rs. 50 (as per intrinsic value, 6050-6000). In this case, you can do one of two things, either you sell the option for Rs. 50 just before expiry or you let it expire, thinking that anyways you will get the profit of Rs. 1500 ((50-20)x50 (1 lot)). This is where the STT trap...
Market Holidays 2014

Market Holidays 2014

Fellow Traders Trading Market holiday for Equities and Futures & Options for 2014. *Muhurat Trading will be conducted. Timings of Muhurat Trading shall be notified subsequently. The holidays falling on Saturday / Sunday are as follows: Trading holidays for Currency Derivatives for...
Unlimited Currency Trading @ Rs. 499 per month!

Unlimited Currency Trading @ Rs. 499 per month!

Now enjoy unlimited online trading in currency derivatives by opting for the “499 unlimited currency plan“. As there is no Securities Transaction Tax (STT) in currency yet, traders can have a much smaller breakeven point in Currency derivatives and our unlimited plan helps to make that breakeven even...
NIFTY movers and shakers

NIFTY movers and shakers

Fellow Traders You are all aware that the NIFTY index is made up of 50 constituent stocks. But you would be surprised to know that the top 10 stocks in NIFTY 50 have a combined weightage of approximately 57%!That means the remaining 40 stocks only have a weightage of 1% of less on average. Following is the list of NIFTY movers and shakers – the top 10 stocks by weightage. As a trader, I like to particularly track these stocks to determine NIFTY movement. One stock which is missing from the top 10 is SBI. SBI stock’s weightage is 1.96%, much lower than what one would expect for India’s largest lender and the largest PSU bank. But nonetheless, traders are well advised to track SBI as well, as it is an important mover and shaker for the NIFTY 50 index. The NIFTY constituent weightage changes on a daily basis based on the market capitalisation and market movement. But the top 10 stocks remain the same, more or less. You can get the daily updated weightage at NSE website . May the odds be ever in your...