Options Trading through icicidirect: Please guide

#1
hi,
I am new at options trading ( I prefer options over futures due to the risk spread). I have learnt the theory by studying at various places and now want to start my first steps.
I have icicidirect account and was wondering if anyone here could help me with the strategy (the icici help/support people did not understand options at all!!!)

Here are my questions (with HDFC as example):
1. Lots of options (for a given strike price) have NO estimated premium - why?

2. suppose I buy OPT-HDFC-26-May-2005-600-CA ; lot 300 ; LTP 15; strike price 600
So my total cost is 184500 + 1845 (brokerage @0.10%). I think in this case I now have to sit tight till May 26 - no other money has to be allocated in the account for covering this position . Two days later, I decide to sell off this option ( I have just bought) - how much money will I get and how much brokerage is taken (In this part I'm confused about premium)

3. Suppose I'm selling the same call option (that I did not have). I know that ICICI does not support covered option selling.
In this case, do I receive the 15 * 300 premium ? How much brokerage is charged?
After selling, suppose the price of share moves up - do I have to cover my sales with increased funds? how much?

4. On settling day, do actual delivery of shares take place - or is just the difference settled.
so if I haev bought OPT-HDFC-26-May-2005-600-CA of lot 300, will I get 300 shares , or is just the difference debited into my account.
If I have sold OPT-HDFC-26-May-2005-600-CA of lot 300, what will happen?

Thanks to all you gurus for reading and spending your time here.
 

sh50

Active Member
#2
Everybody has his own way of charging or showing in the accounts. I can apprise you of the sharekhan way to enable to you to perhaps understand your icici system. In the sharekhan system when you buy and sell a future, they debit/credit the pure loss/profit straightaway and debit the brokerage and service tax separately for one purchase and one sale transaction.

In the case of calls you will still be charged brokerage on the main amount. In your case Rs600*.10=.6 which for a lot of 300 would work out to Rs 180 on one side and depnding upon the selling price similarly on the other side. When you buy they debit the account with 15(premium)*300=4500 and when you sell say if premium is 25 25*300= 7500 by that amount . So unlike futures where the profit/loss is direcly reported here you will have to reduce the debit from the credit for each transaction to arrive at profit.

The senior people in sharekhan here in Delhi also were not able to explain the "other charges" to me. There may not be any malicious intention but one must know one's costing thoroughlly if you are a serious trader. So try to do low volumes and few transactions in the beginning and try to tally their profitability with your calculations on ms-excel. Then you will have to sit and reconcile with them if differences are there. This will enable you to understand also and balance your accounts daily which our great father of the nation used to do. ( For a serious trader, its a must I feel though the habit helped the Mahatma when he was managing massive funds) Be thorough about all charges, not just brokerage.

Above covered permium you should take it up with icici or write to their Bombay branch. I don't think their call centre people know anything except banking.

As for the last question, I think a majority of times people square up transaction and very rarely delivery comes into the picture but with icici better to confirm. I know that if you sell a call and if the price is greater at expirty you pay the difference. similarly for selling a put if price is lower at expirty, you pay the difference. If you have sold a call for hedging a stokck than you can give the stock at expiration

Unless things have improved lately, ICICI has an awful reputation as a broker especially in day trading. Their people in Delhi could not explain anything to me and so we preferred others
 
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#3
Thank you very much for replying. Just one or two clarifications:

sh50 said:
As for the last question, I think a majority of times people square up transaction and very rarely delivery comes into the picture but with icici better to confirm. I know that if you sell a call and if the price is greater at expirty you pay the difference. similarly for selling a put if price is lower at expirty, you pay the difference. If you have sold a call for hedging a stokck than you can give the stock at expiration
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
If I have bought a call and then I sold it (or similarly, if I first bought a put and then sold it), will I still have to settle the difference. I understand that in buying put/call option, the worst I can lose is premium+brokerage, but selling is dangerous. But what I would like to know is if I have sold an option that I have bought earlier, will it still be me who has to settle?
 
#4
If you sell, the option then the buyer is of the option will be responsible for everything.

silverbyte said:
Thank you very much for replying. Just one or two clarifications:



If I have bought a call and then I sold it (or similarly, if I first bought a put and then sold it), will I still have to settle the difference. I understand that in buying put/call option, the worst I can lose is premium+brokerage, but selling is dangerous. But what I would like to know is if I have sold an option that I have bought earlier, will it still be me who has to settle?
 
#5
Answer To Your First Query:
Please Click The "futures And Options" Link.
Click Place Order
Change Futures To Options By Clicking On The Down Arrow
Enter Stock Symbol And Click And Click On "select Contract"
A Window Will Open Giving Details Of All Contracts
 
#6
My Advice, Im Also Trading Option Nifty Calls On Icici-direct But Their Commision Is Toooo Much!!!!!!!! My Experience With Option Please Trade In Nifty Calls.ull Get Nice Reterns In A Week-------v.premkumar.
 
#8
2000 bucks as brokerage!!!

My friend, you dont trade this way find another broker first, you have reliable brokers online who charge you as low as rs 50 per lot.

options are a decaying instrument as such and if u add a 2k brokerage either way, what are you going to profit?

drop me a line if you need to open an inexpensive options trading account. I would be glad to help you out.

regards
 

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