How Much Minimum Capital Is Required For Option Trading

By Abhishek katkar
Derivative FNO Trading : What is Option and Option Trading

Option trading comes in derivative segment. Option trading is different than normal equity trading and it needs regular study, skills and experience to do and make or earn profit/money from it.

Option trading can be done in index, stocks, commodities, currencies and ETF's . So capital required for option trading for all these trading instruments is different but then also you/trader can start option trading in real market because share/stock market is dynamic(means not constant, changes regularly and can be affected by many things) in nature so you can take advantage of it and start with less capital.

Minimum capital required for option trading means what ?

Option does trade in lots and not in single share like equity trading You have to buy one lot and that is the minimum you have to buy for option trading. quantity for per lot is different for every instrument which you trade like in index( Nifty50, bank nifty and sensex ) and so on.

In Nifty 50 one lot equals to 75 shares ( updated by SEBI from Nov 2024)and you have to buy minimum 75 shares which is called one lot and multiply of it. Your minimum trading capital is one lot into price of the option.


For Example

One lot = 75 shares × price + brokerage chages = minimum capital
If option price is 10 rs then 75× 10 = 750 + brokerag charge, so you can trade with 800rs or 1000 rs. also what you get with 1000 rs in nifty 50 is differt in nifty bank there you can get more lot in same capital because quantity per lot is different hence you can trade with small capital and this is the real thing ok.

So here lot size means quantity per lot is different for every trading instrument, so your trading capital will be different.

Minimum capital required for option trading :

You can trade with 1000 to 5000 rs and start trading in option. But you have to understand that you can start with this minimum capital but your profit and risk ratio is different because you are trading with minimum capital and this is for starting option trading in market so you can't compare your trading with others and make any unrealistic conclusions.

You need different capitals for different trading instrument

This minimum capital requirement is based on market directions, trends, volumes, open interets,liquidity, price action and profit margin, risk ration and a traders trading skill

so based on this research date we have concluded that how much minimum capital you/trader needs or require to start option trading in real market is given below:

Minimum capital for Index option trading

You can can start option trading in index with 1000 rs and as per the lot size of indeces like Nifty50, Nifty Bank, Sensex, Nifty financial services.

How and why you can trade with 1000 rs

Reason is the price action so because of it the prices of option changes every day and decreases till the expiry so you can take advantage of this and can start with minimum capital.

Minimum capital for Stock option trading

Stock option trading need more capital because it's lot size is big as compare to index. You can start stock option trading with 3000 - 4000 rs but in stocks lot size is different for every stock so you need different capital for every stock.

Lot size for stock is 200,300 or 500 or 1000 or more So your capital will change so because of it you can start trade in stock option with 3000- 5000 rs but you have to be careful stock options because it's trend, momentum, profit margin, risk ratio is defferent that others so you have see it first.

As per above you can start with this but can't trade in all the stocks beacuse stocks from news, indeces, liquidity and volume have higher prices so you need minimum 15000-20000 rs or more to trade in those stocks.

Minimum Capital for Commodity option trading

Minimum capital required for commodity is 5000 rs you can start with 5000 in commodity but only trade in limited available instrument which price is less because commodity trading needs more capitals which is in laks almost. most trader cant afford this. But you can start commodity trading with 5000 rs .

Minimum Capital for Currency option trading

Minimum capital required for currency is 2000 But you can start with this but curreny market is depends on many national and international microeconomics factor so you won't get liquity, volume, trend, momentum like stocks, index and commodity. So keep this in mind before and then start.

Note: Trader must be know it and study

keep this is in mind before starting option trading. this is reaserched data based on real market experiments but then also you must be careful about option trading and its reverse impact on trading. so you can start option trading in real market with minimum capital does not mean you can make what others are making in market here you can start with mimimum capital hence its output also small and limited so as market is different you can't get same results everyday and every time.

All the best to new traders, its not that much hard as what you see and think.....

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