Trading for Living -- Successfully Completed one year as Full Time Trader

[superman]

You must be having holdings right for collateral margin,, You should include that gains also for calculation, If its liquidbees it will fetch you close to 1% for 3 months

 

[amrutham]

You must be having holdings right for collateral margin,, You should include that gains also for calculation, If its liquidbees it will fetch you close to 1% for 3 months

@superman

At present 100% of my trading capital is in cash.

Earlier I had invested in LIQUIDBEES(whose value is always fixed around 1000 per unit), and pledged them with zerodha to get 90% of the value of the holdings as margin. I used to get 4-5% PA as return in the form of additional units which is a tax free income. But when I thought of changing the broker, I liquidated them. But my plan is again to invest into them once I am decided on the broker. I heard that FYERS provides 95% of the value as margin for LIQUIDBEES

If you are predominantly an option writer and trading with bigger capital, then there is very good advantage with LIQUIDBEES

If we take a hypothetical example of trading capital of 1 crore and average monthly return of 3 %, then

1) If you stay in full cash, your annual return is 36 lakhs, which is completely taxable.

2) But if you invest the complete amount in LIQUIDBEES and at 95%, you get 95 lakhs margin.
At 36 % annual return, your total return is 34.2 lakhs (taxable) + another 4-5 lakhs (tax free).

 

[Smart_trade]

@amrutham,

Nifty Bees is a ETF based on nifty and its gains are taxed as equity mutual funds gains. So if you sell them before 1 year,short term capital gains tax @15 % is payable and if sold after 1 year,then 10 % long term capital gain tax over and above Rs 1 Lakh is payable. So I dont think 4-5 lakhs made in a year are tax free.....please correct me if I am missing any point as I have never invested in Nifty Bees and not aware of any special treatment it has in taxation..but other equity mutual funds are taxed accordingly.

Smart_trade

 

[amrutham]

@amrutham,

Nifty Bees is a ETF based on nifty and its gains are taxed as equity mutual funds gains. So if you sell them before 1 year,short term capital gains tax @15 % is payable and if sold after 1 year,then 10 % long term capital gain tax over and above Rs 1 Lakh is payable. So I dont think 4-5 lakhs made in a year are tax free.....please correct me if I am missing any point as I have never invested in Nifty Bees and not aware of any special treatment it has in taxation..but other equity mutual funds are taxed accordingly.

Smart_trade

@Smart_trade

As per my understanding, returns are in the form of dividends and tax free in the hands of investor up to 10 lakhs/year.

Did something change in this year's budget?

When I checked with a CA last year, he confirmed the same.

There is a good discussion about this on zerodha tradingqa.

https://tradingqna.com/t/how-does-t...-of-dividends-and-price-remains-the-same/8526

Anyway I will cross check with the CA with whom I am filing my returns.

 

[superman]

@superman

At present 100% of my trading capital is in cash.

Earlier I had invested in NIFTYBEES (whose value is always fixed around 1000 per unit), and pledged them with zerodha to get 90% of the value of the holdings as margin. I used to get 4-5% PA as return in the form of additional units which is a tax free income. But when I thought of changing the broker, I liquidated them. But my plan is again to invest into them once I am decided on the broker. I heard that FYERS provides 95% of the value as margin for NIFTYBEES.

If you are predominantly an option writer and trading with bigger capital, then there is very good advantage with NIFTYBEES.

If we take a hypothetical example of trading capital of 1 crore and average monthly return of 3 %, then

1) If you stay in full cash, your annual return is 36 lakhs, which is completely taxable.

2) But if you invest the complete amount in NIFTYBEES and at 95%, you get 95 lakhs margin.
At 36 % annual return, your total return is 34.2 lakhs (taxable) + another 4-5 lakhs (tax free).

Now the margins calculation are very strict !
Apart from liquidbees , other collateral margins will cover only max 50% of actual margin, remaining should be in cash.

So if you short 2 NIFTY option , margin required is 1.2 lakh , only 60K can be covered with NIFTYBEES margin , else has to be in cash.

This is even mentioned in Zerodha's website,, Not sure if they are enforcing it strictly after this SEBI regulation of margins

"

• Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin. If you don’t have enough cash, your account will be in debit balance and there will be an interest charge also called delayed payment charges of 0.05% per day applicable on the debit amount. So assume you take positions that require a margin of Rs 1 lakh, you will need at least Rs 50,000 in cash irrespective of how much collateral margin you have. Assuming you don’t have this Rs 50,000, whatever you are short by will be the debit balance for the day, and interest will be applicable for that amount. Check this link for more information.

"
https://zerodha.com/z-connect/trade...ents/online-pledging-of-stocks-for-trading-fo

 

[superman]

@superman

At present 100% of my trading capital is in cash.

Earlier I had invested in NIFTYBEES (whose value is always fixed around 1000 per unit), and pledged them with zerodha to get 90% of the value of the holdings as margin. I used to get 4-5% PA as return in the form of additional units which is a tax free income. But when I thought of changing the broker, I liquidated them. But my plan is again to invest into them once I am decided on the broker. I heard that FYERS provides 95% of the value as margin for NIFTYBEES.

If you are predominantly an option writer and trading with bigger capital, then there is very good advantage with NIFTYBEES.

If we take a hypothetical example of trading capital of 1 crore and average monthly return of 3 %, then

1) If you stay in full cash, your annual return is 36 lakhs, which is completely taxable.

2) But if you invest the complete amount in NIFTYBEES and at 95%, you get 95 lakhs margin.
At 36 % annual return, your total return is 34.2 lakhs (taxable) + another 4-5 lakhs (tax free).

I think you are talking about LIQUIDBEES
Thats the only one having 1000 fixed price and its the only one which gives dividend units

NIFTYBEES is NIFTY50 ETF
https://www.nseindia.com/live_market/dynaContent/live_watch/get_quote/GetQuote.jsp?symbol=NIFTYBEES

 

[onequorauser]

July 2018 - Zerodha accounts review

In one of the accounts, the challenge was won for the 10th time.

Combined profit for two accounts in the month is around 1 lakh only, which is less than 2% of the capital.



View attachment 27148





View attachment 27150




View attachment 27149

Awesome work man!

 

[amrutham]

@amrutham,

Nifty Bees is a ETF based on nifty and its gains are taxed as equity mutual funds gains. So if you sell them before 1 year,short term capital gains tax @15 % is payable and if sold after 1 year,then 10 % long term capital gain tax over and above Rs 1 Lakh is payable. So I dont think 4-5 lakhs made in a year are tax free.....please correct me if I am missing any point as I have never invested in Nifty Bees and not aware of any special treatment it has in taxation..but other equity mutual funds are taxed accordingly.

Smart_trade

You are right. I was confused with the names. Thanks @superman for pointing out. Edited the original post.

Nifty Bees are taxable.

I meant to say LIQUIDBEES whose value remains constant (1000) and returns are in the form of dividends and tax free in the hands of investor.

 

[amrutham]

Now the margins calculation are very strict !
Apart from liquidbees , other collateral margins will cover only max 50% of actual margin, remaining should be in cash.

So if you short 2 NIFTY option , margin required is 1.2 lakh , only 60K can be covered with NIFTYBEES margin , else has to be in cash.

This is even mentioned in Zerodha's website,, Not sure if they are enforcing it strictly after this SEBI regulation of margins

"

• Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin. If you don’t have enough cash, your account will be in debit balance and there will be an interest charge also called delayed payment charges of 0.05% per day applicable on the debit amount. So assume you take positions that require a margin of Rs 1 lakh, you will need at least Rs 50,000 in cash irrespective of how much collateral margin you have. Assuming you don’t have this Rs 50,000, whatever you are short by will be the debit balance for the day, and interest will be applicable for that amount. Check this link for more information.

"
https://zerodha.com/z-connect/trade...ents/online-pledging-of-stocks-for-trading-fo

I think you are talking about LIQUIDBEES
Thats the only one having 1000 fixed price and its the only one which gives dividend units

Yes its LIQUIDBEES. Thanks for pointing out my mistake.

Regarding margin requirements, liquid bees are considered as cash and you can write an option using them as 100% margin. You only need cash for MTM losses.

 

[amrutham]

Entered into below BN position for 09th Aug expiry.

BN spot @ 27960

Buy BN 28000 PE 200 Qty @ 150
Sell BN 27900 PE 200 Qty @ 104
Sell BN 27500 PE 200 Qty @ 26

Net debit = 5K