With stock broking space moving towards a consolidating and a maturing stage, there are quite a few brokers in the industry with their own pros and cons. The customer does not need to focus just on few handful set of brokers as there are too many options to choose from.
If you prefer to trade in Options segment, then you can actually pick a broker that has done reasonably well in that product and has relatively better values to offer to their clients.
However, before we move to this list of top stockbrokers in Options trading, let’s understand what exactly is options trading in the first place. This can be useful if you are a beginner and are looking to trade specifically in that segment.
An Option is a contract between two parties (buyer and seller) to buy or sell stocks or a set of stocks (loosely called a lot) at a specific price decided on or before a certain date. Let’s take an example to understand the concept:
Let’s say there are two traders – Soumya and Santosh. Soumya has been eyeing the SBI Stock which is currently trading at ?845. However, he wants to buy the stock 10 days later since he is expecting strong quarterly results in favour of the stock. As per his analysis, the stock is going to reach a position of ?870. At the same time, Santosh is looking to sell off its SBI stock holdings in the coming days.
This is where Soumya places an options trading order and Santosh picks that up. Both decide the price point of ?855 and the stock is to be traded 10 days from here. Soumya pays up ?10 as a “Premium” to Santosh to make sure Santosh is locked into this contract and he does not sell the stock off to someone else.
The contract in question here basically means the “Derivative” or “Options agreement”.
Soumya, who is the buyer in the deal, is called the Options Buyer while Santosh is the Options Seller.
The upfront payment of ?10 made by Soumya to Santosh is called the “Premium“.
Once they go into this options trading contract, Santosh cannot sell off the stock to someone else for 10 days while Soumya has the option to either stick with the deal or call of the trade on the 10th day. Whatever be the case, Santosh gets to keep the Premium amount of ?10.
Now, there are 3 possible scenarios from here:
In this case, Soumya will end up paying ?(855 + 10) = ?865 to Santosh where ?10 is the premium decided initially.
Total profit = ?870 – ?865 i.e. ?5
Soumya will most likely oblige with the contract.
In this case, the price has actually dropped and it does not make sense to pay ?865 for a stock that is currently being traded at ?835. Soumya will not be going ahead with the contract. Santosh gets to keep the ?10 premium.
The same logic applies here as well since it does not make sense to pay ?865 for a stock that is still at ?845.
Thus, Soumya as a buyer has the option to either go ahead with the contract or not, depending on the momentum of the stock price. On the other hand, Santosh will be tied up to sell off the stock if Soumya wants at the pre-decided price of ?855. and the stock is locked in for 10 days and he cannot sell it to anybody else at any price whatsoever. He still gets to keep the premium price of ?10 in whatever case may be.
Hopefully, you were able to understand how Option trading works.
At the same time, there are few things that need to be considered while choosing a stock broker that works the best for you in Options trading:
The list has been prepared after a thorough secondary research and inputs from 2000+ clients across different stock brokers in India. At the same time, it needs to be known that this is a list and is not a ranking by any means.
Now, in the rest of the article, let’s talk about the 5 Best Stockbrokers for Options trading in India that do well in the above-mentioned criteria.
ICICI Direct is a bank based stockbroker and is based out of Mumbai. This full-service stockbroker has a presence in 100s of different locations across India. Here are the account opening charges for ICICI Direct:
When it comes to trading in Options segment, ICICI Direct charges in the range of ?35 to ?95 per lot. The actual brokerage rate depends on your initial trading margin and stock market turnover. Here are the complete brokerage charges across segments:
The broker offers the following as well:
5Paisa is a discount trading arm from the house of India Infoline or IIFL. It is considered as one the most economical stock brokers in India with brokerage as low as ?10 per executed order. When it comes to opening and maintaining an account, 5Paisa provides both as free as long as you are starting with an initial margin of ?25,000.
You can check that offer here.
Nonetheless, if you don’t go ahead with the offer, you will be required to pay ?250 as account opening charges and ?400 as annual maintenance charges (AMC).
As mentioned above, the brokerage is pretty reasonable. Here are the details:
Apart from the above, 5Paisa offers the following benefits:
Angel Broking is one of the prominent stock broking houses in the full-service space in India. The broker has more than 2.30 lakh active clients in 2017 and is known for a big focus when it comes to technology and trading platforms. In the recent past, the broker also introduced an automated recommendations engine,
ARQ for people looking for assistance in research and recommendations.
Here are the account opening and maintenance related charges:
Further, when it comes to brokerage, it really depends on the plan (elite, classic, premier, preferred) you go ahead with the broker. They have different brokerage rates depending on the initial margin you place with the broker.
Here are the details:
Apart from the above, Angel Broking offers the following advantages:
Zerodha was the first discount stock broking company in India and was established in the year 2010. Like any other discount broker, Zerodha also offers a flat rate as brokerage. The discount broker is known for different initiatives such as Zerodha OpenTrade, Zerodha Coin, Varsity invariably helping out traders at different levels of the stock market industry.
In case of Zerodha, here are the account related charges:
Zerodha definitely has the advantage of low brokerage for its clients. Here are the rates for Options trading:
Enrich Commodities is a SEBI registered Commodity Broker. Enrich is fastest growing flat fee discount commodity broker offering online trading at MCX. Enrich offers Rs 16 per trade pricing plan which is popular among casual investors and traders. Enrich customer pay flat Rs 16 per executed order irrespective to the size of the order in this plan.
Here are the account related charges in this case:
Now, the brokerage is obviously important and in this case, even though it’s a full-service broker, brokerage charges for options trading is pretty reasonable: