Trading and long term equity appreciation options


What happens in this scenario i am doing both investment in shares and also options trading… Am actually a equity investor but for few times try out fno options… How should i file return? Still the ambiguity is there whether a trader can show his short term trades as capital gains. It automatically means you are an investor. Person B has recreated the position of Person A without actually buying any of the stock.

Make sure to read through varsity. Whatever is the stance once taken, the taxpayer will have to continue with the same in the subsequent years. You will have to use ITR 4 to show option trading which is a business income. While filing the return show your equity investments under capital gains. Benefits Related to Leverage Using options as a stock replacement strategy helps to unlock the potential of leverage.

Delta value is one of the options greeks which can be used to measure how the price of options changes, and it's something you should be familiar with. It's also apparent from the above example that Person B has invested significantly less than Person A. For more experienced traders the ability to be able to hedge the position if circumstances change and choose to what extent the position is hedged can be very appealing. The reason you buy deep in the trading and long term equity appreciation options calls is because they have a delta value of 1, or very close to 1.

The calls you buy should have a strike price that is significantly lower than the current trading price of the underlying security i. Still the ambiguity is there whether a trader can show his short term trades as capital gains. There are, however, further advantages too, but it gets a little more complicated if you wish to take advantage of them. The basic idea of the stock replacement strategy using options is that instead of buying stock that you have highlighted as being a worthwhile investment, you buy calls with stock as the underlying security. Beginner investors can certainly use it as trading and long term equity appreciation options simple alternative to buying shares if they want to reduce the maximum possible loss or take advantage of the power of leverage.

There are also benefits relating to hedging, although this makes trading and long term equity appreciation options strategy somewhat more complex. You can show equity investments under capital gains. Whatever is the stance once taken, the taxpayer will have to continue with the same in the subsequent years. If you like using simple strategies, then these advantages are really all you need to know about the stock replacement strategy. The basic principle is that you can use the money you effectively save by buying calls instead of the underlying stock to hedge against the possibility of the price of the stock falling or remaining the same.