Online trading options allow one to buy or sell stocks, ETFs, etc., at a fixed price for a certain period. This online trading method will enable buyers to buy a security at a specified price or date. Options trading includes several types of charges. In this article, we will learn about the different types of fees in options trading. So let’s go ahead and have a look at these charges in detail.
What Is Options Trading?
Options trading allows you to purchase or sell stocks, exchange-traded funds, and other securities at specified prices on specific dates. The buyers are also entitled to not buy security at a cost or time set in this type of trade. Although it’s not so complex as investing in stocks, options can provide you with a relatively higher profit if the price of your security goes up. Buy and sell crypto currency so visit here swissmoney
This is because, in the case of an option contract, you do not have to shell out the total price for security. Likewise, if the cost of your securities drops, which is called hedging, options trading may reduce your losses.
Charges For Trading Options In India
Brokerage charges
The commissions or fees brokers charge for trading on their client’s behalf are flat rates or percentages. Purchases, sales, consulting, and delivery may be included in the transactions. Due to the rise in competition, apps are giving investors offering Lowest brokerage options when they register on an online trading app or website.
Goods and Service Tax
On the brokerage and transaction fees paid on the services carried out, the government levies an 18% mandatory tax.
Securities Transaction Tax
It is a direct tax on selling or purchasing securities on an Indian stock exchange. These vary with the security type. For instance, if you do intraday and derivative trading, you are subject to an STT only on sale. STT is 0.01% on sale for equity futures, and for equity options, STT is 0.05% on sale. For equity shares (delivery based), a charge of 0.1% on share value implies both buy and sell.
Transaction charges
These are the turnover charges by either NSE or BSE for transactions worth a certain amount. NSE is charging 0.00325%, while BSE charges a total of 0.275%.
SEBI Turnover Charges
The Securities and Exchange Board of India (SEBI) levies an annual turnover fee of 0.0002% of the total transaction value for every trade, whether intraday or delivery trading, purchase, or sale.
Depository Participant Charges
These are the fees you have to pay for keeping your shares electronically. NSDL and CDSl impose this on the demat account brokerage firm that subsequently charges you.
Capital Gains Tax
If the holding period does not exceed one year, tax on short-term capital gains is levied at 15%, excluding the cess and surcharge. Stocks sold after a year are subject to a long-term capital gain tax of 10% on gains up to Rs. 1 lakh. Long-term capital gains up to Rs. 1 lakh are exempt from this charge.
Stamp duty
A tax is levied on trading stocks, currency derivatives, and commodities within India. A single stamp duty rate across the country for both able property and demat shares has come into effect from July 1, 2020. Regarding the issue of share certificates, the fee is 0.005%, and for the transfer of shares, it is 0.015%.
Those mentioned above are imposed in options trading. One of the essential Indian stockbrokers with expertise in F&O futures and options trading is Kotak Securities Limited. To enter the realm of derivatives trading, there are several reasons you should consider using Kotak Securities for your business needs, like Lowest brokerage charges, advanced techniques, vital research, and much more.
Kotak securities is the best for options trading as they carry many benefits.
Final Words
Options trading is a form of speculation in which investors can bet on the evolution of overall stock markets or individual securities, such as stocks and bonds. In options contracts, you can buy or sell an underlying asset at a specified price by a selected date.
Have a look at some of the Best stock application to go for option trading easily and securely. The buying and selling of these underlying assets involve several types of charges. As mentioned above in this article, it is crucial to understand them and know about them deeply whenever going on with options trading to avoid any kind of loss in the future.
