What is the Capital requirement for Option Trading?

We received this question from many of our prospective clients.

Traders who are new or know less about option trading has a common perception that, if you want to earn big with small amount of investment than Option Trading is the best practice. For them option trading is Blue Ticket for getting rich in short span of time. But, let us tell you, it is not that easy to make money from options. As you progress, you’ll understand why we are saying these.

But yes, with focused and disciplined approach any trader can make money even going 50-60% right in his/her trading strategy, and mind it we are not making any vague statement here, worlds best trading wizard Sir Peter Brandt has proved this and still he opines same view.

Coming to our core question, how much capital should you invest for option trading? Answer to this question varies from person to person, it totally depends upon your risk-appetite, understanding of the market, and also it depends upon your expectations.

Few simple Rules, which you should not forget.

  • Option trading requires less capital to employ compare to future market trading or cash market trading.
  • If you are new to option trading then we would recommend you that you better start with only one lot on suggested strategy.
  • To begin with you should have minimum 1 lac capital available free in your account. As such we don’t have any say on capital requirements.
  • We strongly recommend to all our subscribers, that don’t risk more than 3% of your total capital on any single trade. Which means, if you have 1 lac capital in your DMAT account, then, ideally you should not risk more than 3000 on any particular trade. Don’t compromise on this rule. Trust us; this can help you a lot in longer term. 

What is the Capital requirement for Option Trading?

The whole ideology depends upon your risk tolerance level, and understanding. If you are newbie and still in very beginning mode than we would advise you to wait, don’t jump, understand first and then enter into market. Don’t forget  Money Saved is Money Earned

 

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