Margin Trading Facility (MTF) vs. F&O derivatives

What is MTF?

Margin Trading Facility allows you to buy shares in the cash segment by paying only part of the trade value while the broker funds the rest.

The purchased shares are pledged as collateral and you pay interest on the borrowed amount. SEBI regulations state that MTF is primarily for equity delivery trades and is not applicable to derivatives, futures or options . How MTF works

Exchanges require a minimum margin (~20 % of trade value) for cash trades. In MTF the broker funds the rest, giving leverage of 2–4× depending on the stock.

For example, Zerodha’s support page shows that with a 25 % margin you can get ~3× leverage and pay ~0.04 % per day (~14.6 % p.a.) interest on the funded part . The trade can be held indefinitely as long as margin requirements are met .

🚨 SEBI Launches NEW Investment Funds for Sophisticated Strategies! 🚨

Here’s how it works :

What’s the BIG Deal? 💸

SEBI just created Specialized Investment Funds (SIFs)

Think of them as Mutual Funds 2.0:
#YehSahiHai

For rich kids or so called adults : ₹1 Cr CAT 3 were always available

Minimum investment is ₹10,00,000
but no limit for accredited investors

Lets AMCs
(Asset Management Companies) offer hedge fund like strategies :
like betting against stocks (shorting) and investing in them (longing)

🚨 SEBI’s Overhaul of Derivatives Trading: What You NEED to Know 🚨

Problem Solved:

No More Fake OI Manipulation 🕵️♂️ What was happening?

Big players bought far out-of-the-money (OTM) options (like cheap “lottery tickets” with almost zero chance of profit).

These options have low Delta (minimal price movement vs. the stock) but added notional value to Open Interest (OI).

This artificially pushed stocks into “ban periods,” blocking small traders.

#Traders path #Futures & #Options

1: Understanding the game

Trading is not much different from playing poker game or betting on various other things.

It’s just a structured game where rules are not made by anyone, but needs to be followed by everyone in game. Understanding those rules and adjusting yourself is a continuous process which will never end. As #SEBI would keep on changing rules.

The important thing to understand is any thing in life if we want to succeed we need patience and dedication.

WE ARE NOT IN THE SAME BOAT ...

I heard that we are in the same boat.

But it's not like that.

We are in the same storm, but not in the same boat.

Your ship can be shipwrecked and mine might not be.

Or vice versa. For some, quarantine is optimal: moment of reflection, of re-connection. Easy, in flip flops, with a whiskey or tea.

For others, this is a desperate crisis.

For others it is facing loneliness.

For some, a peace, rest time, vacation.

#Data

Global Recession (1986-88)
Market Fall 40.8%⬇️
Post Return 3Yrs 199.5%⬆️

Gulf War/India Fiscal Crises (1990-91)
Market Fall 39.3%⬇️
Post Return 3Yrs 320.5%⬆️

Harshad Mehta Scam (1992-93)
Market Fall - 56.4%⬇️
Post Return 3Yrs - 90.2%⬆️ Stock Market Stumble (1994-96)
Market Fall 41.6%⬇️
Post Return 3Yrs 73.8%⬆️

97 Market Meltdown (1997-98)
Market Fall 40.5%⬇️
Post Return 3Yrs 11.7%⬆️

Dot-Com Bubble (2000-01)
Market Fall 57.1%⬇️
Post Return 3Yrs 110.6%⬆️

#Straddles vs #Strangles ( Sell only )

These are the most common #Options strategies when one would start with #OptionsTrading.

Let’s understand from a broader perspective what’s the difference between these two. Would not like to discuss the construction difference between them if you don’t know stop trading #options

#Straddles

You get higher premium so pnl would be higher compared to #strangles

But from where are you getting higher premiums is that your selling 0.5 #delta.

#Options vs #Futures

Although both are #derivatives, Futures and Options are entirely different in terms of their potential #risk and #return , #leverage and how they work.

How different are futures and options? #Rights vs #Obligations

In #Futures Trading, both the buyer & the seller are #obligated to settle the contracts on or before expiry ie cover shorts or longs or rollover to next contract, regardless of how the underlying asset price moves.

#Option #Greeks Simplified

#Options are definitely more complicated than equity or futures.

Their prices don’t just go up and down.

They also fluctuate based on things like #time, #implied #volatility and #underlying stock movements. #Options #Greeks Are Simply Mathematical Shortforms

Most of you would remember from school that mathematical formulas sometimes were #Greek letters like Pi and #Delta. The same is true for options.

Don’t let them overwhelm you or scare you.

#ITM Vs #OTM #Options Which to #BUY?

When selecting the right #option to #buy, a #trader has several choices to make. One is whether to purchase an in-the-money (ITM) or out-of-the-money (OTM) option. While the goal for "#vanilla" #buyers is to have the option be in the money at expiration, the selected option depends on the amount the trader wants to spend and their risk tolerance, as well as their specific expectations for the underlying stock.