Indian Stock Market’s MTF book is about to hit ₹1,00,000 Crores for the first time!
Does it mean is there insane leverage in the system - Nope! On a brighter side MTF book has seen slow and steady growth with less than 10 stocks having more than 1% exposure via MTF.
Yes, while Dhan is still new and a very very small player in the industry, (to its credit) our team got many large broking platforms to consider offering Pay Later or MTF, few had taken stand they will never ever offer it.
MTF does well in a Bull Market. Will traders hold stocks yielding negative returns and pay interest when market is persistently falling down like in a bear market ? Unlikely. Massive selling and even forced liquidations will happen.
Options, though, bake in that asymmetry from day one. You pay a premium for a lottery-like payoff, knowing most expire worthless. The risk/reward is skewed toward the house — theta decay is the silent interest clock.
SEBI should ban weekly options because they’ve turned markets into casinos running several days a week. Their short expiry makes them pure instruments of speculation — traders chase quick payoffs, and most lose due to time decay and volatility crush.
Instead of encouraging investment or hedging, weeklies fuel gambling-like behavior, high churn, and systemic stress when volumes pile up. They also divert retail from longer-term, healthier financial products. Monthly contracts already exist for genuine hedging and positional trading.
Options add no real economic value, but amplify risk, addiction, and blow-ups.
I’m of the opinion, that Options has to be restricted en-masse in India to develop healthy capital cash markets.
India retail is not ready for options yet, maybe 10 years down the line it can be considered.
This is theory of a worst case outcome only. Profitable traders don’t hold from inception to expiry to take a loss. Momentum traders (buyers) enter and exit fast. Others overnight buyers or sellers cover risk using several different kinds of option strategies.
Why intraday cash trading with 5x leverage is not gambling ? Why MTF with 5x leverage and interest charges not gambling ? Profitable traders whether cash or FnO don’t gamble in the market. They do probabilistic risk managed trades.
US have been running ZDTE options for a very long time now. What the data shows is not supportive of this argument. Short duration expiry contracts help to hedge or speculate at a lower cost and less risk. Monthly has higher premium which means higher risk and tx charges. Also liquidity is lower which means slippage is higher.
Depends on how one is using the many options that options give. If a driver crashes a car we can’t blame the car.
Most of the Indian retail is not ready for the stock market Active traders who trade day in day out consistently for a long time are still a very small % of the total unique demat accounts in the country.
Now that you have brought in Buffet let me tell u that he has actively used options. Problem is not options. Infact majority of the trading volume in the market is in the index option segment. Problem lies with the individual trader.
That is because bull market offers enough moves to exit in profit. In a bear market that won’t be the case. Then the typical behaviour of retail to hold on to losing positions, avg down existing positions etc will be demonstrated.
Active traders who trade day in day out consistently for a long time are still a very small % of the total unique demat accounts in the country.