Pocketful

Blog

  • Best Liquid ETFs in India 2026

    Best Liquid ETFs in India 2026

    We have all been there where you have extra cash sitting in your bank account. It is not a fortune, but enough that you know it should not just lie around earning 3% interest. You do not want to lock it into an FD either, because what if you need it next week? So, where do you park that money safely and make it work a little harder for you? This is where Liquid ETFs come in, the middle ground between “doing nothing” and “taking too much risk.”  

    In this blog, we will explore how Liquid ETFs work, why investors are increasingly using them for short-term parking, and which ones are currently the best options in India.

    So, if you have ever wondered how to make your idle money a little more productive without losing sleep over it, this is for you.

    What are Liquid ETFs?

    • Liquid ETFs are one of the easiest and most convenient ways to park your short-term money while earning a decent return. 
    • These ETFs invest in ultra-short-term instruments such as Treasury Bills, Commercial Papers, and Certificates of Deposit, all of which are considered very safe. Since the investments mature within 91 days, the risk of losing money is extremely low. 
    • You can buy or sell Liquid ETFs anytime during market hours through your demat and trading account. There is no lock-in period, and you get your money almost instantly when you sell.
    • Since Liquid ETFs track the Nifty 1D Rate Index, their returns are usually in line with short-term interest rates, which is generally better than what a savings account offers.
    • They also come with low expense ratios and no exit load, making them a good option for investors looking for safety, liquidity, and a little extra return on idle cash.

    List of Liquid ETFs

    S. NoFundsExpense Ratio (%)Launch DateNet Assets (Cr)1 Wk Ret (%)1 Mth Ret (%)3 Mth Ret (%)6 Mth Ret (%)1 Yr Ret (%)
    1ICICI Prudential BSE Liquid Rate ETF – Growth0.252025-03-137690.080.411.32.61—
    2Mirae Asset Nifty 1D Rate Liquid ETF – Growth0.152024-11-072850.080.411.312.64—
    3Nippon India Nifty 1D Rate Liquid ETF – Growth0.492025-07-2311,4740.10.421.242.39—
    4SBI NIFTY 1D Rate Liquid ETF – Growth0.22025-08-08290.080.40.37–—
    5Kotak Nifty 1D Rate Liquid ETF0.082023-01-241,2300.10.411.332.645.81
    6Zerodha Nifty 1D Rate Liquid ETF0.272024-01-175,4310.080.411.42.625.74
    7DSP BSE Liquid Rate ETF0.32024-03-273810.070.271.092.625.71
    8Bajaj Finserv Nifty 1D Rate Liquid ETF – Growth0.192024-05-286450.080.401.270.585.61
    9Groww Nifty 1D Rate Liquid ETF0.292024-09-241000.080.401.122.866.76
    10Shriram Nifty 1D Rate Liquid ETF0.422024-07-05390.080.401.252.525.56

    Read Also: List of Best Commodity ETFs in India

    Benefits of Investing in Liquid ETFs 

    If you are looking for a safe place to park your money for a short while, maybe between trades, or just until you decide on your next investment move, Liquid ETFs can be a great option. Some of the benefits of these ETFs are mentioned below. 

    1. Easy Access to Your Money

    The biggest perk of Liquid ETFs lies in the name, liquid. You can buy or sell them anytime during market hours, just like any other stock. No waiting for redemption or settlement delays, your money is available whenever you need it.

    2. Get Better Returns Than a Savings Account

    Liquid ETFs usually offer returns that are a bit higher than what you would get from a savings account. They invest in short-term, low-risk instruments like Treasury Bills and Certificates of Deposit, so your money is put to work, even while it is “resting.”

    3. Low Costs, No Extra Fees

    These ETFs come with very low expense ratios and no entry or exit loads. 

    4. Transparent and Flexible

    Because they are traded on the stock exchange, you can always see their price and portfolio in real time. You are in complete control, buy, sell, or hold whenever you like.

    5. Safe and Steady Option

    Liquid ETFs stick to high-quality, short-term debt instruments, which makes them one of the safest options out there. They do not swing wildly with the market, so they are perfect for conservative investors who want peace of mind.

    Who Should Invest in Liquid ETFs? 

    Below is who can benefit the most from a liquid ETF:

    1. Salaried Professionals and Young Investors

    If you are someone who wants to park your salary surplus or emergency savings without locking it away, Liquid ETFs are a great choice. You get more than a savings account, and your money stays just as accessible.

    2. Traders and Short-Term Investors

    Traders often keep extra funds ready to grab market opportunities. Instead of letting it sit idle, they use Liquid ETFs to get small but steady returns between trades and move it back into equities whenever they find a good deal.

    3. Corporations and Business Owners

    Companies or business owners who need to manage temporary cash flows can use Liquid ETFs for short-term parking. They are safe, flexible, and can be redeemed quickly when funds are needed for operations.

    5. Anyone Looking for a Better Alternative to Savings Accounts

    If your money is just sitting in a low-interest savings account, you could shift a portion into Liquid ETFs. You will have easy access to it, but with better returns and no long-term commitment.

    Risks Involved

    Liquid ETFs are not completely risk-free. The risks are small, but you still should know what you are investing in.

    1. Low Trading Volumes at Times

    Even though they are called Liquid ETFs, some of them do not trade very actively on the stock exchange. This can lead to a small difference between the buy and sell price (called a price spread), especially if you are trying to trade larger amounts.

    2. You will need a Demat Account

    Unlike a liquid mutual fund, you cannot invest directly from your bank account. You will need a demat and trading account to buy or sell Liquid ETFs. It is not complex, but it adds an extra step if you are new to investing.

    3. You Can Trade Only During Market Hours

    Liquid ETFs can be sold only when the stock market is open. So if you need cash urgently at night or on a Sunday, you will have to wait until trading hours resume.

    Read Also: List of Best Gold ETFs in India

    Conclusion 

    Liquid ETFs are a simple way to make your idle money earn a little extra while keeping it completely safe and accessible. They bring together the best of two: the stability of a liquid mutual fund and the flexibility of stock trading. If you have cash in your savings account or you want a place to park your money for a short while before investing it elsewhere, Liquid ETFs are an ideal option, low-cost, transparent, and easy to buy or sell whenever you need.

    However, remember to go for well-known options with good trading volumes so you do not face liquidity issues.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Mutual Fund vs ETF. Are They Same Or Different?
    2What are ETFs? Are ETFs good for beginner investors?
    3ETF vs Index Fund: Key Differences You Must Know
    4How to Invest in ETFs in India – A Beginner’s Guide
    5What is Nifty BeES ETF? Features, Benefits & How to Invest?
    6What is Gold ETF? Meaning & How to Invest Guide
    7Types of ETFs in India: Find the Best for Your Investment
    8ETF vs Stock – Which One is the Better Investment Option?
    9Top Gold Mutual Funds in India
    10Digital Gold vs Gold ETF: Which is Better?
    11Small-Cap ETFs to Invest in India
    12Best ETFs in India to Invest
    13SBI Gold ETF vs HDFC Gold ETF: Where To Invest?
    14Gold BeES vs Gold ETF: Meaning, How It Works, Taxation
    15Sovereign Gold Bonds vs. Gold ETF: Which is a Better Investment?
    16List of Best Commodity ETFs in India

    Frequently Asked Questions (FAQs)

    1. How are they different from Liquid Mutual Funds?

      Liquid ETFs trade on the stock exchange, while liquid mutual funds are bought directly from fund houses. ETFs are usually cheaper and have no exit loads.

    2. Do I need a demat account to invest?

      Yes, you will need a demat and trading account to buy or sell Liquid ETFs.

    3. Are there any extra charges or exit loads?

      No, Liquid ETFs do not have entry or exit loads; you just pay regular brokerage charges.

    4. How are Liquid ETFs taxed?

      They are taxed like debt funds, and any gains are added to your income and taxed according to your income tax slab.

    5. Can I sell them anytime?

      Yes, you can sell them anytime during market hours and get your money back within a day.

  • MTF Pledge vs Margin Pledge – Know the Differences

    MTF Pledge vs Margin Pledge – Know the Differences

    You’ve probably had that moment—spotting a stock that’s about to take off because of good news or strong fundamentals—but when you check your account, there’s just not enough money to grab the opportunity.

    Or maybe you have a solid, long-term portfolio of stocks accumulated, and you wish that this portfolio could be used to make some quick moves in Futures & Options (F&O) without having to sell your holdings.

    If you’ve been in either of these situations, you’ve probably stumbled upon two terms that brokers use, MTF Pledge and Margin Pledge. They sound almost the same but are complex in nature. They are as different as taking out a home loan to buy your first house versus taking a loan against a house you already own or Loan against property,  think of your broker as a bank for a moment. 

    Let us break down the MTF Pledge meaning and the margin pledge meaning in simple words for a better understanding. This blog will help investors in knowing exactly what is MTF Pledge and what is Margin Pledge.

    What is the MTF Pledge?

    Margin Trading Facility (MTF) has a characteristic where investors “Buy Now, Pay Later” but only for stocks. It is a facility that lets you buy shares even if you only have a fraction of the money needed. You put down your portion (this is called the margin), and your broker lends you the rest of the amount.

    For instance, if you want to buy shares worth Rs.1,00,000, your broker might ask you to pay just Rs.25,000 and the remaining amount of Rs.75,000 is funded. But the stocks that are bought are kept as security with the broker similar to the case of Home Loan where the new house is held by the bank. 

    This mandatory promise, or “pledge,” is what we call the MTF Pledge. It’s simply a way to secure the loan. It’s important to remember that pledging these shares doesn’t give investors trading power, rather it’s purely a security measure.

    Read Also: Pledging Shares vs Pay Later (MTF): Key Differences

    How Does MTF Work?

    1. Select ‘MTF’ Option: While you are ready to buy a stock, you need to select options like ‘Delivery’ or ‘Intraday’ whereas also look for another option called ‘MTF’, ‘e-Margin’, or ‘Pay Later’ and select it.
    2. Order Placement: Once you are done with placing your buy order, the brokers platform will take your margin amount from your account, and the broker will add their funds to complete the purchase.
    3. Pledge the Shares: You might get a SMS or email with a link from the depository (CDSL or NSDL) and you had to click it, log in, and approve the pledge with an OTP before 9 PM. But these days this process has been automated by most of the brokers without requiring any OTP or link approvals. 

    You need to keep a note that since it’s a loan, you’ll pay a small daily interest on the amount the broker funded. So, it is best suited for trades that you plan to hold for a few weeks or months, but maybe not for years.

    Use our Margin Trading Facility Calculator

    What is the Margin Pledge

    Margin pledge works differently as this is for traders who already have a portfolio with stocks, ETFs, or mutual funds and want to put that portfolio to work without selling a single thing.

    Here, investors can “pledge” their existing investments to their broker as a guarantee. In return, brokers give you a special trading limit known as collateral margin. You can now use this collateral margin for other trading activities, like for intraday or in the Futures & Options (F&O) market. Here all the shares have your ownership and you still enjoy the benefits of getting dividends, you’ve just unlocked the hidden power of your portfolio.

    Read Also: Key Differences Between MTF and Loan Against Shares

    How does Margin Pledge Work?

    1. Go to Your Holdings and Pledge: You simply log into your broker’s platform (like Zerodha’s Console), head over to your portfolio, and you’ll see an option to “Pledge” your shares. You pick the stocks and the quantity you want to use.
    2. Understanding the “Haircut”: The broker is cautious as the share price might go up or down, so they don’t give a trading limit equivalent to your portfolio instead they apply a small safety discount, called a haircut, to protect themselves. Let’s say if you pledge shares worth Rs.1,00,000 and the stock has a 20% haircut, your broker will give you a collateral margin of Rs.80,000.
    3. Start Trading: This new margin of Rs.80,000 will show up in your account, ready to be used for your next big trade in F&O or for your intraday strategies.

    MTF Pledge vs. Margin Pledge

    FeatureMTF Pledge Margin Pledge 
    Requirement To buy specific stocks by borrowing money from your broker.To get a trading limit by using your existing portfolio as a guarantee.
    OptionalNo, It’s mandatory for every single MTF trade, as per SEBI rules.Yes, it’s completely voluntary, done only when you need the extra margin.
    PledgingThe new shares are pledged The existing shares and other securities you already own
    FundsYou get a direct loan from the broker to complete a purchase.You get a trading limit (collateral margin) against the value of your assets.
    InterestYes, you pay daily interest on the loaned amount.No interest charged on the margin itself. However, there’s a 50% cash rule for F&O trades that you need to follow to avoid interest charges
    UsageOnly to buy and hold those specific shares you purchased with MTF.Can be used for intraday trading, futures trading, and for selling options.
    RisksIf the price of that one stock you bought falls sharply, you could get a margin call.A margin call can come if your whole portfolio’s value drops OR if your F&O trade goes against you.

    Read Also: Differences Between MTF and Loan Against Shares

    Conclusion

    One should consider MTF Pledge when they have a strong gut feeling or solid research telling them that a specific stock is set to rise in the short-to-medium term and they want to go big on that single idea by leveraging your broker’s funds. On the other hand Margin Pledge is suitable for fast-paced investors of F&O or intraday. Here the goal is not just to buy one particular stock, but to have a flexible and ready source of capital to support all your trading activities. It’s the ultimate tool for making your portfolio work harder for you.

    Leverage is a powerful tool, it can amplify your gains, but it can also magnify your losses. Always take a moment to understand the costs and risks before you jump in. 

    .NO.Check Out These Interesting Posts You Might Enjoy!
    1Margin Against Shares: How Does it Work?
    2Top Tips for Successful Margin Trading in India
    3Lowest MTF Interest Rate Brokers in India
    4What is Intraday Margin Trading?
    5What is Operating Profit Margin?
    6What is Stock Margin?
    8What is Margin Funding?
    9What Is Margin Trading?
    10What is Pay Later (MTF) & Steps to Avail Pay Later?
    11What is Pledging of Shares?

    Frequently Asked Questions (FAQs)

    1. Can shares be sold even when they are pledged? 

      Absolutely, for a Margin Pledge, most modern brokers let you sell the pledged shares directly and the money from the sale is simply used to cover the margin you were using. MTF Pledge, selling the shares means the loan is being closed, here the broker will take back their loan amount plus any interest, and the rest of the money (profit or loss) is all yours.

    2. What happens if the MTF pledge is not done in time? 

      Although this system has been automated by most of the brokers, if your broker still uses the old manual OTP system and you miss the deadline (usually 9 PM), your trade might be treated as a normal delivery order, meaning you will have to pay the full amount of the shares. 

    3. Do Investors have to pay interest on a Margin Pledge?

      No, investors don’t have to pay any interest for getting the collateral margin. However, there’s a rule for F&O trades you hold overnight, i.e. SEBI says at least 50% of investors’ margin must be in cash. If you use more of your collateral margin and fall short on the cash part, your broker will charge interest on that shortfall.

    4. Can MTF be used in Futures & Options (F&O) trading? 

      No, MTF is designed specifically for buying equity shares for delivery and cannot be used for trading in F&O, currency, or commodities.

    5. Why do brokers apply a “haircut”? 

      A haircut is just a safety buffer for the broker as stock prices can be volatile. By applying a haircut (a small percentage reduction), the broker ensures that even if the value of your pledged shares drops, they are still protected. 

  • Physical Settlement in Futures and Options

    Physical Settlement in Futures and Options

    Think of a derivative contract as a promise, some promises are settled with cash, where only the profit or loss are exchanged. But others require you to exchange the actual item. In the stock market, this is called physical settlement.

    If you hold certain stock contracts until their expiry, you must either buy or sell the actual shares. This can be a huge surprise if you’re not ready, let’s get straight into All About physical delivery in Futures and Options. This blog gives you the essential knowledge about physical delivery in Futures and Options to help you trade smarter.

    What is Physical Settlement?

    Physical settlement means that when a stock derivative contract expires, you don’t just settle the profit or loss in cash. Instead, the actual shares are transferred between the buyer and seller.   

    • If you have to buy, you must pay the full value of the stock and get the shares in your demat account, this is called taking delivery.   
    • If you have to sell, you must have the shares in your demat account to give away, this is called giving delivery.   

    This rule only applies to derivatives on individual stocks. Index contracts like the Nifty 50 are always settled in cash, since you can’t deliver an index.   

    SEBI introduced this rule to make the markets safer and fairer. The main goals were to:

    • Reduce risks: Knowing you might have to buy shares worth lakhs makes you trade more carefully.   
    • Stop price manipulation: It’s much harder to manipulate prices when you have to actually arrange for shares or full payment.   
    • Align with global standards: This brings the Indian market in line with major international markets.   

    Read Also: Difference Between Options and Futures

    Positions Marked for Physical Settlement?

    If you hold any of these positions until the market closes on expiry day, you are on the hook for physical settlement.

    For Futures Contracts

    Any open stock futures position at expiry will be physically settled.

    • A Long (Buy) Future means you must take delivery (buy the shares).   
    • A Short (Sell) Future means you must give delivery (sell the shares).   

    For Options Contracts

    For stock options, settlement only happens if your option is In-the-Money (ITM) when it expires. If it’s Out-of-the-Money (OTM), it just expires worthless with no further obligation.   

    The exchange automatically assumes you want to exercise your ITM option, so you must act if you want to avoid it.   

    Obligations 

    This table makes it clear what you have to do.

    Contract PositionYour Obligation at ExpirySimple Meaning
    Long Stock FuturesTake DeliveryYou must buy the shares.
    Short Stock FuturesGive DeliveryYou must sell the shares.
    Long ITM Call OptionTake DeliveryYou must buy the shares.
    Short ITM Call OptionGive DeliveryYou must sell the shares.
    Long ITM Put OptionGive DeliveryYou must sell the shares.
    Short ITM Put OptionTake DeliveryYou must buy the shares.

    How is it calculated?

    The final transaction value is not based on your trade price. It’s calculated using a specific price on expiry day.

    • For Futures: The settlement happens at the Final Settlement Price (FSP), which is the average price of the stock in the last 30 minutes of trading on expiry day.   Example: Let’s say you have 1 lot of ABC Ltd. futures (lot size 500 shares). On expiry day, the FSP of ABC Ltd. is calculated to be Rs.1,200. Your obligation is to pay the full contract value, which is 500 × Rs1,200 = Rs 6,00,000, to take delivery of the 500 shares.
    • For Options: The settlement happens at the Strike Price of your option contract. Example: Let’s say you have 1 lot of an ABC Ltd. call option with a strike price of Rs.1,150. The stock closes at Rs.1,200 on expiry, so your option is ITM. Your obligation is to pay the value calculated using the strike price, which is 500 × Rs 1,150 = Rs 5,75,000, to take delivery of the 500 shares.    

    This is a crucial point. Your F&O profit might be small, but your settlement obligation could be for lakhs of rupees. Don’t confuse the two.

    Contract TypeSettlement Value Is Based On
    Stock FuturesFinal Settlement Price (FSP) of the stock
    Stock OptionsStrike Price of the option contract

    Read Also: Types of Futures and Futures Traders

    Settlement Timeline and Deadlines

    The physical settlement process starts at the end or during the week of expiry.

    • The Final Week: In the last four days before expiry, exchanges start increasing the margin required for long ITM options. This is a signal to either close your position or arrange for funds.   
    • Expiry Day: This is your last chance to act, as most brokers have a cut-off time (often around noon) to square off positions. If you don’t act, and don’t have the required funds or shares, your broker will close the position for you to manage their risk.   
    • After Expiry (T+1 Day): The actual shares and funds are exchanged. Shares are credited or debited from your demat account.   

    Always check with your broker for their specific deadlines, as they can vary from broker to broker.   

    The Margin Squeeze

    To enter an F&O trade, you pay a small margin. But for physical settlement, you need 100% of the contract value, either in cash to buy the shares, or the actual shares in your demat account to sell them.   

    To manage risk, exchanges force you to face this obligation early. They do this by gradually increasing the margin requirement on long ITM options in the last few days before expiry. This “staggered” margin increase makes traders exit, who can’t afford the full settlement, preventing a wave of defaults on the final day. If you can’t meet these increasing margin calls, your broker will likely close your position.   

    Read Also: What Is Day Trading and How to Start With It?

    Conclusion

    Physical settlement is a fundamental part of the market that you must respect. Being unprepared can be very costly.

    Smart investors shall be aware and shall always know your open stock F&O positions as expiry week begins. Understanding if you need to buy or sell shares if you hold your position, means knowing your obligations and also keeping an eye on margin requirements, as they will shoot up in the final week. And finally act in time if you don’t want to take or give delivery, square off your position before your broker’s cut-off time.

    By understanding these simple rules, you can navigate expiry week confidently and avoid any nasty surprises.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1What is Options Trading?
    2What is AI Trading?
    3Top Tips for Successful Margin Trading in India
    4MCX Trading: What is it? MCX Meaning, Features & More
    5What is Intraday Trading? 

    Frequently Asked Questions (FAQs)

    1. How can investors avoid physical settlement? 

      The easiest way is to close (square off) your open stock F&O position before it expires and before your broker’s cut-off time. For futures, you can also roll over your position to the next month.   

    2. What happens if investors have to sell shares that they don’t own? 

      This is a “short delivery.” The exchange will buy the shares for you in an auction, and you have to pay the auction price plus a penalty, which is often very expensive.   

    3. What happens if I have to buy shares but don’t have enough money? 

      Your account will go into a negative balance, and your broker will charge you interest. The broker can also sell the shares delivered to you to recover the amount. You will be liable for any loss and charges.   

    4. What are the charges for physical settlement different?

      Yes. Brokerage is typically higher (e.g., 0.25% of the settled value). Also, the Securities Transaction Tax (STT) is much higher, at the rate applicable for equity delivery (0.1% of contract value).   

    5. Does this apply to Nifty and Bank Nifty contracts?

      No. Physical settlement is only for stock derivatives. All index F&O contracts are settled in cash. 

  • What is Convertible Debentures?

    What is Convertible Debentures?

    When a company needs money to grow, it usually has two main options, either they take a loan (which is called debt) or sell a small part of its ownership (which is called equity or shares). But what if there was an investment that could be both.

    Yes you’ve heard it right Convertible debentures are one such financial tool that creates a mix of both debt and equity. Convertible Debentures first starts as a loan to the company, but it holds a secret power for investors to transform loan into ownership. This unique feature makes Convertible Debentures one of the most interesting financial instruments in the financial market. 

    What is Convertible Debenture?

    Debentures are a formal IOU from a company to the investor. When you invest in debentures, you’re lending the company money. In return, they promise to pay you regular interest and give your original money back after a set time period. But you should know this, debentures are usually unsecured meaning it is based purely on companies reputation and ability to make money, which adds a bit of risk.   

    Convertible Debentures gives investors the power to switch from being a lender to a part-owner or a shareholder. Investors can choose if they want to convert or just get their initial investment back when the loan period ends. This option is what makes a debenture so much more attractive, balancing risk with the potential for a much bigger reward.   

    • Loan: When you invest you get a fixed interest payment, it acts just like a fixed deposit. If the company’s stock does not perform well, you can just hold the debenture and get your principal investment back at the end, protecting your initial investment.   
    • Ownership: If the company’s stock performs well and its stock price starts to go up, you can convert your debentures into shares and you can earn in the company’s growth which can be much more than just the interest.

    Read Also: What is Non Convertible Debentures?

    Why are convertible debentures offered?

    Companies also have multiple reasons to issue convertible debentures.

    • Lower Interest Payments: As the company offers an attractive option to convert it from debentures to shares, companies can get away with paying a lower interest rate compared to a normal loan hence saving money.   
    • Putting Off Dilution: When a company issues new shares, the ownership of existing shareholders gets smaller, or “diluted.” With convertibles, this dilution is pushed into the future and might not happen at all if investors don’t convert.   
    • Tax Savings: The interest paid by the company falls as debt, accounted as business expense, which reduces their taxable profit. This makes raising money with debentures more tax-efficient than paying dividends to shareholders.   

    When a company issues convertible debentures, it also sends a strong, positive signal among the investors as it portrays they are confident their stock price will rise, making it a great deal for everyone.   

    Types of Convertible Debentures

    • Fully Convertible Debentures (FCDs): With these, investors’ entire loan should be converted into shares but you don’t get any cash back. This is common for new, high-growing companies that want their lenders to become long-term partners.   
    • Partially Convertible Debentures (PCDs): This acts as a mix for the investors where a part of your debenture converts to shares, and the rest remains as loan which gets paid back to you in cash. This is often used by established companies.   
    • Optionally Convertible Debentures (OCDs): Here the power is in the hands of investors, you can choose to convert to shares or just take your initial investment back at the end. This is the most flexible type for investors.   
    • Compulsorily Convertible Debentures (CCDs): It can be understood by its name as in this conversion is mandatory. There is no option, debentures must be turned into shares at the maturity date. This is for investors who are ready to take on the full risk of the stock’s future.   

    Read Also: Debentures: Meaning, Features, Types, Benefits and Risks

    Fully vs. Partially Convertible Debentures

    ParameterFully Convertible (FCD)Partially Convertible (PCD)
    What Converts?The entire amount becomes shares.A part becomes shares, the rest remains a loan.
    Who Issues It?Usually newer companies with high growth potential.Usually established companies with a track record.
    What happens at the end?You become a full shareholder.You become a shareholder and get some money back.
    Risk LevelHigher risk, higher potential reward.Balanced risk, as part of your money is safe as a loan.

    Key Features of Convertible Debentures 

    When you invest, there’s always a rulebook. Here are the key terms to look for:

    • Conversion Price: This is the set price per share for when you convert. If the conversion price is ₹100 but the stock is trading at ₹150, converting is a profitable move.   
    • Conversion Ratio: This tells you how many shares you get for each debenture unit. A 10:1 ratio means you get 10 shares for one debenture unit.   
    • Coupon Rate: This is the annual interest you earn as long as it’s a loan. It’s usually lower than a normal debenture because investors enjoy the right to convert.   
    • Maturity Date: This is the end date of the loan. If you have an OCD and don’t convert, the company must pay you back your principal on this date.   
    AdvantagesDisadvantages
    You get regular interest payments, giving you a fixed income. The interest is less than what a normal bond would pay. 
    You can profit if the company’s stock price goes up. The company could fail and not be able to pay you back.
    If the stock falls, you can just take your money back (with OCDs). If you convert and the stock price then drops, you could lose money.
    If the company goes bankrupt, you get paid before stockholders.It’s not a simple product, you need to pay attention to make the right choice.

    Read Also: What Is Foreign Currency Convertible Bonds (FCCB)?

    Conclusion

    Convertible debentures are not for everyone in the market. They do not act as FD in terms of safety and not even risky as buying shares from the financial markets. They give investors a middle ground where it gives both safety of debt as well as growth potential of equities owned. 

    Investors who have a moderate appetite for risk can invest in the convertible debentures. If you believe in a company’s long-term growth story but want some protection in case things don’t go as planned, a convertible debenture could be a very interesting tool to have in your investment portfolio.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Electoral Bonds Explained: What Are They and Why Did Supreme Court Ban It?
    2CAT Bonds: An Easy Explainer
    3Explainer on Green Bonds: History, Process, Pros, Cons, and Future Outlook
    4What Is Bowie Bond (Music Bonds) : History, Features, Advantages & Disadvantages
    6Secured and Unsecured Bonds: Understand the Difference
    7Detailed Guide on Bond Investing: Characteristics, Types, and Factors Explained
    8What is Coupon Bond?
    9Tax-Free Bonds: Their Features, Benefits, and How to Invest
    10What are Bond Yields?
    11Stocks vs Bonds: Difference Between Bonds and Stocks

    Frequently Asked Questions (FAQs)

    1. Are convertible debentures advantageous for new investors? 

      Yes! Convertible debentures give you the best of both worlds. You get regular, fixed interest payments like a normal bond, which provides steady income. At the same time, you have the option to convert your debentures into company shares, giving you a chance to benefit if the stock price goes up. 

    2. What are the main risks attached to convertible debentures? 

      There are two main risks:Default risk: Most convertible debentures are unsecured, so if the company runs into trouble, it might not be able to return your money.Conversion risk: If you convert your debentures into shares and the stock price drops, you could lose money on your investment.

    3. How can I make money from a convertible debenture? 

      There are two ways to earn:Interest payments: You get periodic coupon payments as long as you hold the debenture.Conversion into shares: If the company’s stock does well, you can convert your debentures into shares at a fixed price (usually lower than the market price) and sell them for a profit.

    4. What happens if the invested company goes bankrupt?

      If the company goes bankrupt, debenture holders are paid before shareholders. This means the company must pay back its debenture holders from any remaining assets before giving anything to shareholders.

    5. Can debentures be converted into shares forcefully by the company?  

      It depends:Optionally Convertible Debentures (OCDs): The choice is yours—you decide if and when to convert.Compulsorily Convertible Debentures (CCDs): Conversion is mandatory at maturity, so you don’t get to stay a lender.

  • What Is Loan-to-Value (LTV) Ratio in Margin Trading?

    What Is Loan-to-Value (LTV) Ratio in Margin Trading?

    Have you ever wondered how much borrowing is safe if you trade by pledging your holdings? This question becomes the most important in margin trading. In this trading, investors borrow money from the broker by pledging their stocks and take bigger positions with the same money. But how much should this borrowing be? This is where the Loan-to-Value (LTV) Ratio comes in which determines how much you can borrow against your pledged assets. In this blog, we will understand in detail what the loan to value ratio is, how it works, and why it is very important for a trader to understand it.

    What is the Loan-to-Value (LTV) Ratio 

    Loan-to-Value Ratio, or LTV for short, is a financial indicator that shows how much of your loan you have taken compared to the total value of a property. This ratio measures how much of your loan amount is the value of your pledged assets (such as a house, stocks or bonds). It is usually expressed as a percentage (%).

    LTV is most commonly used in home loans, gold loans, and especially in investment options like margin trading. When you take a loan from a broker by pledging your securities (such as shares), the LTV ratio determines the extent of the loan you will get.

    For example, if you pledged shares worth ₹1,00,000 and got a loan of ₹70,000 on it, then your LTV ratio will be 70%. That is, you have borrowed up to 70% of the total value of your property.

    What is the formula for LTV?

    Loan to Value Ratio Formula:

    LTV Ratio = (Amount borrowed ÷ Current value of security pledged) × 100

    Example : Suppose you have pledged shares worth ₹1,00,000 and you are given a margin loan of ₹70,000 by the broker Then 

    LTV = (70,000 ÷ 1,00,000) × 100 = 70%

    What is the role of LTV in margin trading?

    LTV i.e. Loan-to-Value Ratio plays a very important role in margin trading. When a trader pledges shares or mutual fund units in his demat account with a broker, the broker lends him a certain amount based on the value of these assets; this is called margin loan.

    But the question is how much money will be received against the value of that collateral? The answer to this is LTV.

    How does the broker decide LTV?

    The percentage of LTV depends on which securities you are pledging and how stable and reliable their market value is.

    • If you have pledged stocks of blue-chip companies (like TCS, Infosys, HDFC Bank), then these companies are considered less volatile. In such a situation, the broker can give you LTV ranging from 70% to 80%.
    • On the other hand, if you pledge penny stocks, mid-cap or stocks of more volatile companies, then the LTV reduces to 50% to 60%, because the risk of decline is higher in such stocks.

    SEBI rules and effect of haircut : According to SEBI, every broker is required to apply a haircut on pledged securities. This haircut is a safety cut in the value of the asset which reduces the risk of the broker in case of a sudden market crash or decline.

    For example : If you have pledged shares worth ₹1,00,000 and SEBI has fixed a 20% haircut on it, then the broker will consider the effective value of that collateral as ₹80,000. Now if LTV of 75% is applied on it, then you will get a usable margin of about ₹60,000.

    Read Also: Differences Between MTF and Loan Against Shares

    Why is Loan-to-Value Ratio so important in trading?

    Loan-to-Value Ratio (LTV) is one of the most important metrics in margin trading, as it directly reflects the safety of your position and your creditworthiness to the broker. A high LTV indicates that you have taken a lot more loan than the value of your assets, which means more risk.

    1. Increasing LTV poses a risk of margin call

    In margin trading, when the value of your portfolio decreases and it affects the LTV, the broker can trigger a margin call on your account. This means that you will have to immediately deposit additional margin to support your position or reduce the loan by selling parts. If you do not respond in time, the broker can automatically sell your holdings, thereby ensuring a loss.

    2. It also affects interest rates

    LTV is not only an indicator of risk, but it also affects the interest rate at which you will get a loan from the broker. A lower LTV usually results in a lower interest rate. But as the LTV increases, the broker’s risk also increases and the interest rate can be higher accordingly. This is why trading on a higher LTV can prove to be expensive.

    3. Higher LTV means more leverage and more risk

    When you pledge your stocks and trade with a loan from the broker, you are using leverage. LTV indicates the level of that leverage. For example, if your LTV is 75%, it means you have traded with only 25% of your capital and the remaining 75% is borrowed. This strategy can certainly increase profits, but the losses can also be huge if there is a slight fall in the market.

    4. Understanding LTV is essential for successful trading

    Often new investors focus only on how much credit they can get from the broker, and end up using the entire limit. But experienced and professional traders know that it is not only wise to reach the LTV limit, but it is also important to keep that ratio stable and safe. A controlled and prudent LTV is the key to success and longevity in trading.

    Factors That Influence LTV in Margin Accounts

    There are many important factors behind deciding LTV (Loan-to-Value) in Margin Trading. All these factors together decide how much margin an investor will get on pledged shares.

    1. Volatility of the stock : If a stock is more volatile, that is, its prices fluctuate rapidly, then the LTV available on it may be less. Brokers do not want to take much risk in this situation.
    2. SEBI Classification (Group 1 vs Group 2) : SEBI has divided the shares into Group 1 and Group 2. The shares coming in Group 1 (such as blue-chip stocks) are considered more secure and there is a possibility of getting higher LTV (60–75%) on them. On the other hand, more haircuts are given on the shares included in Group 2.
    3. Liquidity of the stock : Highly liquid stocks, that is, those which can be bought and sold easily, get better LTV. The broker usually gives less LTV on pledging shares with low liquidity.
    4. Market conditions and broker’s risk policy : If there is a sharp decline or uncertainty in the market, the broker may reduce the LTV as per its internal risk norms. Sometimes brokers apply stricter margins as per their risk appetite.
    5. Regulatory Updates and Circuit Breakers : If SEBI implements new rules or circuit breakers are imposed on a stock, then the LTV may also change. The broker can immediately increase the haircut or remove the MTF eligibility.

    Read Also: What is Margin Money?

    Common Mistakes Investors Make Around LTV

    1. Using excessive leverage : Many investors use all the funds they can get through LTV without thinking that the market may crash. High leverage can turn a small loss into a big one.
    2. Ignoring margin calls : If the value of pledged shares falls, the broker sends a margin call. Ignoring this can lead to your account being frozen or shares being confiscated.
    3. Pledging high-risk stocks :  Stocks that have a lot of volatility (such as penny or speculative stocks) have higher haircuts and lower margins. This can lead to frequent margin shortfalls.
    4. Underestimating interest cost : Funds received through LTV attract interest. If this cost is not understood, the profit that is shown may actually turn out to be a loss.
    5. Not having a Risk Management Plan : While doing margin trading, it is important to have a proper stop-loss, diversification and capital allocation strategy. Trades done without planning can be harmful.

    How to Manage and Control Your LTV Ratio

    1. Monitor the portfolio regularly : Keep a constant eye on your pledged shares and their market value. If the price of any stock falls, it will directly affect your LTV. Check portfolio health at least once a week.
    2. Diversification is important : Pledging only one type of stock or one sector can increase the risk. Pledging shares of different sectors and fundamentally strong companies reduces the haircut and keeps the LTV stable.
    3. Keep an emergency margin buffer : Never use your entire eligible margin. Keep a buffer of at least 10–15% so that you do not have to face margin shortfall in a sudden market fall.
    4. Use calculators and tools : Nowadays many platforms provide advanced LTV calculators and portfolio analytics tools. These tools can tell you in real-time what your current LTV is and how much margin is left.
    5. Use alerts and automation : Most brokers now offer tools that send you alerts via SMS or app notifications when your LTV is approaching the limit. Also, some platforms have an auto-margin top-up facility so that the system automatically maintains the buffer.

    Read Also: What is Pledging of Shares?

    Conclusion

    If you do margin trading, understanding the Loan-to-Value (LTV) ratio is as important as trading. This ratio determines how much funds you can borrow against your pledged securities and how far your risk is spread. If you trade without understanding it, you may face a margin call or forced sell-off in a sudden market fall. Therefore, a smart trader is one who keeps the LTV in balance, tracks it from time to time and takes action when needed. After all, proper planning and control are the companions of good trading.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Margin Against Shares: How Does it Work?
    2Top Tips for Successful Margin Trading in India
    3What is MTF (Margin Trading Facility)?
    4What is Intraday Margin Trading?
    5What is Operating Profit Margin?
    6Top 10 Highest Leverage Brokers in India – Maximize Profits with Margin Trading
    7What is Margin Funding?
    8What is Pay Later (MTF) & Steps to Avail Pay Later?
    9Top Tips for Successful Margin Trading in India
    10Value Investing Vs Intraday Trading: Which Is More Profitable?

    Frequently Asked Questions (FAQs)

    1. What is the full form of LTV in margin trading?

      LTV means “Loan-to-Value”, which tells how much loan or margin you can take against the value of pledged shares.

    2. What happens if my LTV ratio increases too much?

      If the LTV becomes high, the broker may send a margin call or sell your shares.

    3. Is a lower LTV always better?

      Yes, lower LTV is safer as it carries less risk if the market falls.

    4. How can I reduce my LTV ratio?

      You can reduce your LTV by adding cash or more shares, or by closing some positions.

    5. Does every broker offer the same LTV limit?

      No, different brokers follow different haircuts and LTV limits, depending on the category of stock.

  • List of Best Commodity ETFs in India

    List of Best Commodity ETFs in India

    In case you have ever questioned yourself about how to hedge your investments against inflation or market fluctuations, one of the alternatives that you can consider is commodity ETFs. They have become a popular investment choice among Indian investors who want to invest in gold, silver and other commodities in a convenient manner without holding them. We will discuss what is meant by commodity ETFs, why they are important and which ETFs are the best in India.

    Commodity ETFs – An Overview 

    A Commodity ETF (Exchange-Traded Fund) lets you invest in a commodity, like gold or silver, in the stock market. Instead of buying physical gold bars or silver coins, you can buy units of an ETF that mirrors the price of that commodity. Some ETFs hold actual physical commodities in vaults, while others track prices through futures contracts. Either way, you get exposure to the commodity’s performance without worrying about storage, purity checks, or insurance. In India, most commodity ETFs focus on gold and silver. 

    Types of Commodity ETFs 

    1. Gold ETFs 

    Gold ETFs are the most popular commodity ETFs in India. They invest in physical gold of 99.5% purity and replicate the price of domestic gold. Each unit usually represents 1 gram of gold, so you can buy or sell them on the stock exchange, similar to shares, without worrying about purity, storage, or making charges. 

    2. Silver ETFs 

    If gold feels a little too traditional, Silver ETFs can be a good option. They work just like gold ETFs but track the price of physical silver (usually 99.9% purity). Silver has both investment and industrial demand, which means it can be a bit more volatile, but also offers great growth possibilities when global demand spikes.

    3. Futures-Based Commodity ETFs  

    Some ETFs do not hold physical gold or silver; instead, they invest in commodity futures contracts. This means their returns depend on how those futures perform, which can make them a little more complex to understand. They are influenced by factors like contango and backwardation (basically, how future prices compare to current prices). These are common abroad (for crude oil or agriculture), but still new in India.

    4. Multi-Commodity or Basket ETFs 

    Multi-Commodity ETFs (also called basket ETFs) invest in a mix of commodities like metals, energy, or even agriculture. They do not depend on the performance of a single metal like gold or silver. Instead, they track an index made up of multiple commodities, offering more balanced exposure.

    Read Also: List of Best Gold ETFs in India

    Best Commodity ETFs in India 

    CompanyMarket Cap. (Crores)Expense Ratio %52 Week High52 Week Low
    Nippon India ETF Gold BeES₹29,3230.80₹108.69₹61.67
    SBI Gold ETF₹12,1340.70₹112.23₹62.85
    HDFC Gold ETF₹14,0530.59₹112.80₹63.60
    ICICI Prudential Silver ETF₹9,4810.40₹190₹86
    Kotak Silver ETF₹2,0180.45₹178.98₹81.80

    1. Nippon India ETF Gold BeES

    One of the oldest and most trusted gold ETFs in the Indian market, Nippon India ETF Gold BeES directly tracks the price of gold in the domestic market. It’s highly liquid and backed by physical gold stored in vaults with an expense ratio of around 0.80%
    It is reliable, easy to trade, and a great way to get exposure to gold without worrying about storage or purity.

    2. SBI Gold ETF

    Managed by one of the largest and most respected AMCs in India, the SBI Gold ETF is another solid option for gold investors. It mirrors domestic gold prices and ensures full backing by physical gold with an expense ratio of around 0.70%. It is considered ideal for conservative investors looking for safety and steady performance linked to gold prices.

    3. HDFC Gold ETF

    The HDFC Gold ETF combines brand trust with solid tracking performance. It’s known for tight tracking errors and ease of liquidity on the exchange, with an expense ratio of 0.59%. It is low-cost, and strong liquidity makes it a go-to for many investors.

    4. ICICI Prudential Silver ETF

    If you are looking to diversify beyond gold, silver ETFs are worth exploring. ICICI Prudential Silver ETF gives direct exposure to silver prices and is ideal for investors who believe silver has long-term potential in both industry and investment. The underlying Asset is physical silver, and the expense ratio is 0.40%. It is great for diversification and tapping into the growing industrial demand for silver.

    5. Kotak Silver ETF

    Another good choice for silver exposure, Kotak Silver ETF provides returns closely in line with domestic silver prices. The expense ratio is around 0.45% and is backed by physical silver and is easy to trade, making it a convenient way to participate in silver’s price movements.

    How to Choose the Right Commodity ETF 

    Choosing the best ETF for you depends on your goals. Below are a few points to keep in mind while choosing an ETF;

    1. Check the expense ratio – Lower fees mean you will get more returns
    2. Look at tracking error – A good ETF should closely mirror the actual price of the commodity.
    3. Pay attention to liquidity – Higher trading volume ensures you can buy and sell easily without big price gaps.
    4. Review AUM (Assets Under Management) – Larger funds tend to be more stable and better managed.
    5. Know what you are investing in – Physical ETFs are simpler, while futures-based ones can be affected by price rollovers.

    Read Also: Best ETFs in India to Invest

    Taxation of Commodity ETF 

    Before you invest, you should know how your returns will be taxed because taxes can quietly eat away your profits. 

    Commodity ETFs, whether they track gold, silver, or a mix of other commodities, are not considered like equity investments. They follow a different set of tax rules.

    1. Short-Term Capital Gains (STCG)

    If you sell your ETF within 12 months of buying it, your gains are taxed as a short-term capital gain, which means they get added to your total income and are taxed according to your income tax slab. 

    Example – Suppose you buy a Gold ETF for ₹1,00,000 and sell it after 8 months for ₹1,15,000.
    That ₹15,000 profit will be taxed as per your slab, which can be 10%, 20%, or 30%, depending on which income tax bracket you fall in.

    2. Long-Term Capital Gains (LTCG)

    If you hold your Commodity ETF for more than 12 months, your profit becomes a long-term capital gain, and you pay a flat 12.5% tax on it. Remember, there is no indexation benefit anymore. Earlier, investors could adjust their purchase price for inflation, which helped reduce taxable gains. But under the latest tax rules, that benefit is gone.  

    Example – Let us say you buy ₹1,00,000 worth of Gold ETF in January 2024. After holding them for about 15 months, you sell them in April 2025 for ₹1,30,000, and you have a profit of ₹30,000.

    Since you held it for more than 12 months, it qualifies as a long-term capital gain. So, your tax will be 12.5% of ₹30,000, which equals ₹3,750

    3. Securities Transaction Tax (STT)

    STT is not levied on Gold, Liquid, GILT ETFs, and some international ETFs. Although STT is levied on other ETFs.

    Read Also: Small-Cap ETFs to Invest in India

    Conclusion 

    Commodity ETFs transfer the ancient charm of gold and silver to a new, digital era. They are liquid and can be traded easily, hence being an ideal choice for investors who wish to diversify other than stocks and bonds. However, it is suggested to only invest in known, liquid ETFs of reputable fund houses. And do not forget: while gold and silver glitter, discipline and patience shine even brighter in the long run.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Mutual Fund vs ETF. Are They Same Or Different?
    2What are ETFs? Are ETFs good for beginner investors?
    3ETF vs Index Fund: Key Differences You Must Know
    4How to Invest in ETFs in India – A Beginner’s Guide
    5What is Nifty BeES ETF? Features, Benefits & How to Invest?
    6What is Gold ETF? Meaning & How to Invest Guide
    7Types of ETFs in India: Find the Best for Your Investment
    8Best ETFs in India to Invest
    9Top Gold Mutual Funds in India
    10Digital Gold vs Gold ETF: Which is Better?

    Frequently Asked Questions (FAQs)

    1. Are commodity ETFs safe to invest in? 

      Yes, they are SEBI-regulated and are backed by physical assets, which makes them a safe option to invest in.

    2. Do commodity ETFs pay dividends? 

      No, they only reflect price changes of the underlying commodity. 

    3. When is the best time to invest in commodity ETFs? 

      They work best when invested for the long term and not short-term trades. 

    4. How can I track performance? 

      You can check live prices either on NSE/BSE or your broker’s app anytime. 

    5. What is the minimum amount to invest in a commodity ETF? 

      Usually, the cost is very less, often a few hundred rupees. 

  • Top 20 Basic Stock Market Terminology for Beginners

    Top 20 Basic Stock Market Terminology for Beginners

    Whenever your friends were discussing the stock market using various jargon such as IPO, Bid Price, etc., now you don’t need to feel left out. 

    In today’s blog post, we will explain to you the top 20 basic stock market terminologies which can help you get started on your investment journey with confidence.,

    Basic Stock Market Terminology

    The following are 20 fundamental stock market terms every beginner should know before starting to trade.

    1. Share or Stock

    A stock or share represents ownership in a company’s equity. The value of shares purchased by you became the part-owner of that company. Companies issue shares to raise capital and grow their business, and by owning them, you become a part of their future growth.

    2. Bid and Ask Price

    Bid and ask are the two most important prices that an investor must know. The bid price refers to the highest price which an investor is willing to pay to purchase a stock. Whereas the ask price which a seller is willing to sell the stock. And the difference between bid-ask prices is known as the spread.

    3. Broker

    The broker is an entity which acts as a middleman between you and the exchange and provides you with a platform to execute trades on the stock exchange. For their services, they charge a brokerage fee from you.Whenever your friends were discussing the stock market using various jargon such as IPO, Bid Price, etc., now you don’t need to feel left out. 

    In today’s blog post, we will explain to you the top 20 basic stock market terminologies which can help you get started on your investment journey with confidence.

    4. Trading Volume

    The trading volume refers to the total number of shares traded or bought, or sold during a particular time period. It acts as a key indicator for traders in identifying the trend of a stock. An increasing stock price, along with the higher trading volume, indicates a bullish momentum, and vice versa.

    5. Liquidity

    It refers to the availability of buyers and sellers at the time of executing traders. Higher liquidity in any stock allows you to easily buy or sell it. Stocks with higher liquidity allow you to execute the shares at a fair price.

    6. Volatility

    Volatility in the stock market refers to how quickly the price of a stock or market index is moving up and down. Prices of stocks with higher liquidity fluctuate very rapidly compared to illiquid stocks. Higher volatility also comes with an opportunity to earn profit from quick movement in prices.

    7. Market Capitalisation

    Companies listed in India are categorised based on their valuation, and the method used to calculate this valuation is market capitalisation. It is calculated by multiplying the total number of outstanding shares by the current market price of a share. Based on the market capitalisation, companies are categorised into large-cap,

    8. Initial Public Offering (IPO)

    When a company seeks to raise capital from the public, it can do so by launching an IPO. It is the first step taken by a company to get itself listed on the stock market. This process is known as an Initial Public Offering. Once the shares are listed on a stock exchange, they can be traded freely in the market.

    9. Stock Split

    This is a corporate action in which a company divides its existing shares by reducing the price per share and increasing the outstanding shares. Shares were split by the company to make it more affordable and accessible to a wide range of investors. However, the share split only increases the number of outstanding shares but does not  increase the company’s overall market value.

    10. Blue-chip Stock

    Blue-chip stock is shares of large-cap companies. They are generally shares of large, established, and financially strong companies. Investment in blue-chip stocks carries relatively lower risk, but they have the potential of providing stable and consistent returns.

    11. Market and Limit Orders

    These are types of orders which one can place while executing their trades. In a Market order, the shares are executed at the best available market price. Whereas, in a limit order, the shares are executed at the price defined by the trader or at a specific price. Limit orders are not executed immediately.

    12. Bull and Bear Market

    These are the two common phases of the market. A bull market is a phase when the stock prices are rising or investors have an optimistic view of the market. However, in the bear phase of the market when the stock price generally falls more than 20%.

    13. Dividend

    When a company earns profit, it distributes a certain portion of its profit to its existing shareholders in the form of a dividend. Investment in dividend yield companies is suitable for conservative investors or for investors seeking regular income. However, not every company pays dividends; some use their profit for expansion.

    14. Index

    An index represents a group of stocks which reflects the performance of a particular sector. The performance of the index can be used to measure the performance of the portfolio. Examples of popular indices are Nifty 50, Nifty Mid Cap, Bank Nifty, Nifty IT, etc.

    15. Stoploss

    A stoploss is a tool used by traders as a risk management strategy to limit their potential loss. It is an automated order placed by the trader to buy or sell a security when the share price reaches a certain level. The primary objective of this order is to protect investors from loss without consistently monitoring the market.

    16. ETF

    ETF or Exchange Traded Fund is a type of investment tool offered by asset management companies. This is traded on the stock exchange like any other stock. An investor is required to have a demat and trading account if they wish to invest in it. It invests the money pooled from investors in a basket of assets such as bonds, indices, etc.

    17. Demat and Trading Account

    To invest in the stock market, it is essential to have a trading and demat account. A trading account allows you to execute your trades in the securities market. Whereas, in your demat account, you can hold securities or shares. Both accounts are interconnected and need to be opened with a broker.

    18. Market Capitalisation

    Market capitalisation is often used to calculate the market value of a company. It is calculated by multiplying the total number of outstanding shares by the current market price of the share. Based on the value calculated, the companies are divided into three different categories such as large-cap, mid-cap, and small-cap.

    19. Portfolio

    A portfolio is a combination of different asset classes or investments held by an individual or an institution. The wide range of financial instruments held by an investor may include equity, debt, commodities, etc.

    20. Capital Gain

    Whenever you earn profit from investment in the equity market, you will have to pay Capital Gain Tax on it. The applicable capital gain tax depends on the duration of investment, such as investments sold before one year are subject to tax as per the applicable tax rate of short-term capital gain, which is 20%. However, if the investment is sold after one year of investment, it will be taxed at a rate of 12.5%, after including the exemption of 125000.

    Read Also: What is a good rule for investing in stocks?

    Conclusion

    On a concluding note, having an understanding of the stock market’s basic terminology is essential for a beginner to start investing in stocks. Initially, various terms might confuse you, but over time, you will get to understand them, and it can help you navigate the market easily. To get more clarity about any terms related to the stock market, you can read blogs, articles, and consult your investment advisor.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Intraday Trading Rules and New SEBI Regulations
    2Breakout Trading: Definition, Pros, And Cons
    35 points to be considered before buying or selling any stocks
    4What Is Day Trading and How to Start With It?
    520 Things to Know Before the Stock Market Opens
    6Best Share Market Learning Apps in India

    Frequently Asked Questions (FAQs)

    1. What is the difference between a demat and a trading account?

      A trading account is used by a trader to execute trades on the exchange. Whereas,a demat account is required to hold the securities purchased in electronic form.

    2. Do I need to pay taxes on the profit earned from the stock market?

      Yes, the profits earned from the stock market are subject to tax as per the applicable capital gain tax. If the shares are sold within the period of one year, short-term tax liability will be generated, and if the holdings are sold after one year, long-term capital gain tax is payable.

    3. What is the formula to calculate market capitalisation?

      The formula to calculate market capitalisation is as follows:Market Capitalisation = Total Number of Outstanding Shares * Current Market Price.

    4. When does the bear market phase start?

      A bear market is a phase when the stock or the index value falls by 20% or more.

    5. What is the meaning of IPO?

      An IPO is also known as an Initial Public Offering. When a company wishes to raise capital from the public, it can do so by launching its IPO.



  • Surat Prop Trading Scam ₹150 Cr Fraud Unfolds

    Surat Prop Trading Scam ₹150 Cr Fraud Unfolds

    The “Prop Trading Scam” that originated in Surat has now become a nationwide topic of discussion. Traders have lost over ₹150 crore by being lured with promises of funded accounts and high leverage. This scam highlights the dangers of unregulated platforms and agents. Police and the Economic Offences Wing (EOW) are investigating, while investors are struggling to recover their money. This blog will explain how the scam unfolded, who was affected, and what lessons traders should learn from it.

    Background: How the Surat Prop Trading Scam Started

    A “prop trading scam” is a scheme where you’re told you can invest a small amount of capital to gain a large trading limit, make profits, and share in a funded account. However, in reality, this model often operates through unregulated agents and unregistered platforms, where there are no rules or oversight. For example, some “prop firms” claim that the investment will be made with their capital, not yours but investigations reveal that the entire system is based on simulated trading, exorbitant fees, or inconsistent leverage models.

    How the Scam Operated: Inside the Prop Funding Trap

    • Initially, Green Wall Enterprises (also known as Greenvol Enterprises) introduced this model in Surat, Gujarat, presenting themselves as agents of a reputable broking house. However, this agency arrangement was found to be invalid.
    • Money from investors was typically collected not directly through the exchange, but via UPI, digital transfers, and personal accounts.
    • Initial complaints registered fraud amounting to approximately ₹4.84 crore, with over 50 brokers and traders filing complaints.
    • However, as this network was uncovered, the case was not limited to Surat—it spread to other parts of the country (NCR, Jaipur, Ranchi, Kolhapur), and the estimated total loss could exceed ₹150 crore.
    • As complaints increased, it emerged that the firm had presented itself as an agent of a registered broking house, a claim that the broking house itself denied.
    • The model was risky because the control of the investment was not entirely in the hands of the trader; the profit withdrawal process was unclear, and when it came time to withdraw money, many traders did not receive their payments.
    • According to experts, such structures are particularly risky because they lack regulatory oversight and the safeguards understood by the investor are absent.

    Read Also: Scam 1992: Harshad Mehta Scam Story

    The Timeline : Surat Prop Trading Scam

    Year/DateTitle of the eventDescription
    August 2025Initiation of complaintsTraders working within the legal system have filed a complaint against Green Wall Enterprises in Gujarat, alleging that their accounts have been blocked and that funded-trading promises have not been fulfilled.
    August 2025 (August 14)Disappearance of the main accusedNimit Shah and Hiren Jadav, the alleged heads of Green Wall Enterprises, suddenly disappeared, causing fear and confusion among traders.
    September 2025The brokerage firm denied it.Jainam Broking Ltd clarified that Green Wall Enterprises is not their agent and there was no transactional relationship between them.
    2025-NovemberLoss estimates exceed ₹150 croreBased on claims from affected traders in various states across the country, the total estimated loss is now reported to be over ₹150 crore. 
    2025-NovemberPolice investigation and enforcement actionThe Gujarat Police and Economic Offences Wing (EOW) are actively investigating this case. The review of irregular agent-model, client-payment channels, and promised funded-trading schemes is ongoing.

    The role of the main accused and the companies

    Main Firm: Green Wall Enterprise (also known as “Greenvol Enterprises”) : 

    This firm operated from Surat, Gujarat, and allegedly promised traders “funded accounts” and high-leverage facilities. The defendants include two key individuals from this firm: Hiren Jadav (previously arrested) and Nimit Shah (still absconding in the case).

    Broking Firm Name: Jainam Broking Ltd : 

    The Green Wall firm claimed to be operating on behalf of Jainam Broking Ltd. However, Jainam Broking has denied this claim. The extent of the legitimacy of this link-up is still under investigation.

    Agent/Sub-broker Network and Investors : 

    The firm recruited investors through a network of agents: for example, one agent collected approximately ₹2.53 crore from 25 clients, while another 29 investors deposited approximately ₹2.11 crore.

    Read Also: Indian Stock Market Scams: Biggest StockMarket Frauds in India

    Investigation and Regulatory Action

    1. FIR and Initial Action : The Economic Offences Wing (EOW) of Surat Police has registered a case against Green Wall Enterprises under sections of fraud, criminal breach of trust, and conspiracy. The main accused, Hiren Jadav, has been arrested, while Nimit Shah is currently absconding.
    2. Regulatory Bodies : Jainam Broking Ltd. has clarified that it had no agency or transactional relationship with Green Wall. This is significant because regulators such as the Securities and Exchange Board of India (SEBI) and exchange-related entities are monitoring the agent/AP model, where unregistered intermediaries pose a problem.
    3. Direction of Ongoing Investigation : Major proceedings involve scrutinizing bank accounts, digital transfer chains, and off-book transactions. The agent network and the movement of deposits (cash/UPI) are also being tracked. This investigation aims to determine where the funds went, who all were involved, and how to prevent such incidents in the future.
    4. What to Expect Next : A series of arrests may follow, and charge sheets will be filed. Stricter guidelines on unauthorized agent networks may be issued by SEBI/broker-member entities. Recovery for affected investors is an uphill battle; the legal and civil recovery process can be lengthy.

    Impacted Traders and Industry Reactions

    1. Traders’ Situation : Following the Surat Prop Trading Scam, several investors claimed that their trading accounts were closed without prior notice. In many cases, traders neither received their profits nor their initial investment back. The Economic Offences Wing (EOW) has received hundreds of complaints from investors alleging that they were misled and given false promises by agents.
    2. Industry Reaction : The broking industry has called this incident a “wake-up call” for investor awareness. Leading brokerage houses have clarified that their authorized agents are only SEBI-registered and are not part of any “funded account” schemes. According to experts, this case demonstrates that unregulated prop trading models can pose a serious threat to investors.
    3. Key Takeaways : This incident serves as a lesson for the entire trading community that it is essential to verify the legal status, registration, and funding process of any platform before investing in it. Financial experts believe that this case could be a significant step towards strengthening investor protection and transparency regulations in India.

    Why Such Scams Keep Happening in India

    1. Rapid Growth in Retail Trading : The number of retail traders in India has increased rapidly in recent years. New investors often fall for offers like “funded accounts” and “high returns” without sufficient information. This haste paves the way for such scams.
    2. Social Media Promotion and Influencer Influence : Many fraudulent platforms gain trust through social media and YouTube. Influencer marketing and false promises are used to attract investors, leading to the rapid expansion of cases like the “Surat Prop Trading Scam.”
    3. Regulatory Loopholes and Lack of Awareness : Proprietary trading models are not yet directly under SEBI regulation, which allows fraudsters to exploit this loophole. Additionally, a lack of financial awareness among investors and a failure to rely on proper documentation makes these scams even easier to perpetrate.

    Read Also: Ketan Parekh Scam Explained: K-10 Stocks, Front-Running, and Lessons for Investors

    Conclusion 

    The Surat Prop Trading Scam has once again proven that unregulated trading platforms can pose significant risks to investors. Losses exceeding ₹150 crore in just a few months have raised serious questions about market transparency. This incident serves as a warning to investors to thoroughly verify the legitimacy and SEBI registration of any “funded account” or “prop trading” offer before investing. Awareness is the strongest defense against such financial fraud.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Fake Payment Screenshot Scam: How to Identify and Avoid It
    2Satyam Scam Case Study: Know The Story Indians
    3BluSmart Shutdown & Gensol Scam: ₹262 Crore Scam That Shook India’s EV Sector
    4Explainer on UPI Scams: Latest Scams, Economic Data, Government Actions, and Prevention Tactics
    5Financial Scams in India: Types, Resolution, and Awareness
    6What Happens If a Stockbroker Shuts Down?
    7Freedom 251 Scam Explained: The Truth Behind India’s Cheapest Smartphone Fraud

    Frequently Answered Questions (FAQs)

    1. What is the Surat Prop Trading Scam?

      This is a trading fraud in which investors were defrauded of crores of rupees under the guise of funded accounts.

    2. Which company is involved in this scam?

      Surat-based Green Wall Enterprises is primarily accused in this scam.

    3. How much loss has been reported?

      A loss of approximately ₹150 crore has been reported so far.

    4. What action is taken by the police?

      The EOW has registered a case, arrested one accused, and the investigation is ongoing.

    5. How can traders stay safe?

      Always check the platform’s SEBI registration and payment channels before investing.

    6. Is prop trading regulated in India?

      No, prop trading is not currently directly regulated by SEBI.

  • Groww (Billionbrains Garage Ventures Ltd.)IPO Allotment Status, GMP, Subscription & Listing Date

    Groww (Billionbrains Garage Ventures Ltd.)IPO Allotment Status, GMP, Subscription & Listing Date

    Groww (Billionbrains Garage Ventures Ltd.), one of India’s fastest-growing investment and wealth management platforms, is launching an initial public offering (IPO) to raise up to ₹6,632 crore. The issue opens for subscription on November 4, 2025, and will close on November 7, 2025, with a price band fixed at ₹95 to ₹100 per share. The IPO comprises a fresh share issuance of approximately ₹1,200 crore and an offer-for-sale (OFS) of about ₹5,432 crore by existing shareholders. The shares are proposed to be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on November 12, 2025, subject to allotment and necessary regulatory approvals.

    Groww (Billionbrains Garage Ventures Ltd.) IPO Day 3 Subscription Status

    On Day 3, Groww (Billionbrains Garage Ventures Ltd.). IPO witnessed a strong investor turnout, closing with an overall subscription of 17.60 times. The Qualified Institutional Buyers (QIB) category led the demand with a robust 22.02 times subscription, indicating solid institutional participation. Among Non-Institutional Investors (NII), the bNII (above ₹10 lakh) portion was subscribed 16.28 times, while the sNII (less than ₹10 lakh) segment saw 10.04 times subscription, resulting in an overall NII subscription of 14.20 times. The Retail Individual Investors (RII) category was subscribed 9.43 times, reflecting healthy retail interest. Overall, the issue garnered 31,40,951 applications, with total bids amounting to approximately ₹64,186.764 crore, showcasing strong confidence across investor categories in the company’s growth potential.

    Investor CategorySubscription (x)
    Qualified Institutional Buyers (QIB)22.02
    Non-Institutional Investors (NII)14.20
    bNII (above ₹10 lakh)16.28
    sNII (less than ₹10 lakh)10.04
    Retail Individual Investors (RII)9.43
    Total Subscriptions17.60

    Total Applications: 31,40,951

    Total Bid Amount (₹ Crores): 64,186.76

    How to Check Groww (Billionbrains Garage Ventures Ltd.) IPO Allotment Status?

    Groww IPO allotment can be easily checked online in two ways: from the Registrar’s website and from the BSE or NSE website. This IPO will be listed on both the exchanges – BSE and NSE, so the allotment status will be available to all investors on both platforms.

    Method 1: Registrar’s website (MUFG Intime India Pvt. Ltd.)

    The most reliable way is to check allotment from MUFG Intime India Private Limited’s website.

    How to do:

    • Visit MUFG Intime India Pvt. Ltd.’s official website
    • Select “Groww IPO” from the IPO list
    • Enter your details PAN number, Application number, or DP/Client ID
    • Click on Submit
    • You will see the allotment status on the screen.

    Method 2: Check from BSE or NSE’s website

    If there is more traffic on the registrar’s website, allotment status can also be checked from BSE or NSE.

    How to do:

    • Visit BSE or NSE’s official website
    • Select ‘Equity’ segment
    • Select “Groww IPO” from the IPO list
    • Enter PAN number and Application number
    • Click on Search

    Objective of the Groww (Billionbrains Garage Ventures Ltd.) IPO

    Groww plans to utilize the net proceeds from the fresh issue for the following purposes. The proceeds from the Offer for Sale (OFS) will be received by the selling shareholders and not by the company :

    Use of IPO ProceedsAmount (₹ Cr)
    Investment in technology infrastructure, AI, and data security enhancement420.75
    Expansion of product offerings and development of new financial services285.60
    Marketing, brand promotion, and customer acquisition initiatives210.40
    Strengthening subsidiaries and investing in overseas expansion163.25
    General corporate purposes and working capital requirements120.00

    Groww (Billionbrains Garage Ventures Ltd.) IPO GMP – Day 3 Update

    The grey market premium (GMP) of the Groww IPO stands at ₹5 as of November 07, 2025 (Day 3). Considering the upper end of the price band at ₹100 per share, the estimated listing price is around ₹105, reflecting a potential gain of approximately 05.00% per share in the grey market.

    DateGMPEst. Listing Price Gain 
    07-11-2025 (Day 3)₹5₹10505.00%

    Disclaimer: The above GMP (Grey Market Premium) is just unofficial market information, which is not officially confirmed. These figures are shared for informational purposes only and investment decisions based on these should be based on the investor’s own research and discretion. We do not conduct, recommend or support any kind of transaction in the grey market.

    Groww (Billionbrains Garage Ventures Ltd.) IPO – Key Details

    ParticularsDetails
    IPO Opening DateNovember 04, 2025
    IPO Closing DateNovember 07, 2025
    Issue Price Band₹95 to ₹100 per share
    Total Issue Size66,32,30,051 shares(aggregating up to ₹6,632 Cr)
    Listing PlatformBSE, NSE
    RegistrarMUFG Intime India Pvt. Ltd.
    Groww (Billionbrains Garage Ventures Ltd.) IPO RHPGroww

    Important Dates for Groww (Billionbrains Garage Ventures Ltd.) IPO Allotment

    EventDate
    Tentative AllotmentNovember 10, 2025
    Refunds InitiationNovember 11, 2025
    Credit of Shares to DematNovember 11, 2025
    Listing Date November 12, 2025

    Overview Of Groww (Billionbrains Garage Ventures Ltd.)

    Groww (Billionbrains Garage Ventures Ltd.) is a technology-driven, digital investment and wealth management platform that enables users to invest in stocks, mutual funds, ETFs, IPOs, and other financial products seamlessly. With a mission to provide “Investing Made Simple” for everyone, Groww integrates advanced technology, AI-driven analytics, and a robust cloud infrastructure to offer an intuitive, secure, and scalable investment experience. India is its largest market, where it serves millions of retail investors through its mobile app and web platform, while also exploring international expansion opportunities. The company leverages data analytics, automation, and personalized insights to provide investors with accessible financial tools and investment guidance. According to industry reports, Groww is one of India’s fastest-growing retail investment platforms by active users and transaction volume in FY2025, making it a key player in the country’s digital wealth management ecosystem.

    Frequently Answered Questions (FAQs)

    1. What is the opening and closing date of Groww (Billionbrains Garage Ventures Ltd.)?

      Groww IPO is open on 04 November 2025 and will close on 07 November 2025.

    2. What is the price band of the Groww (Billionbrains Garage Ventures Ltd.) IPO?

      Its price band is fixed from ₹95 to ₹100 per share.

    3. What is the GMP (Grey Market Premium) of Groww (Billionbrains Garage Ventures Ltd.) IPO today?

      The GMP on 07 November 2025 is ₹5, which leads to a possible listing price of ₹105.

    4. What is the total issue size of Groww (Billionbrains Garage Ventures Ltd.) IPO?

      The total issue size of the Groww (Billionbrains Garage Ventures Ltd.) IPO is ₹6,632 crore, structured as a combination of fresh issue and Offer for Sale (OFS) by existing shareholders.

    5. What is the expected listing date of Groww (Billionbrains Garage Ventures Ltd.)?

      This IPO is expected to be listed on BSE and NSE on 12 November 2025.

  • Bullish Options Trading Strategies Explained for Beginners

    Bullish Options Trading Strategies Explained for Beginners

    Imagine you’re a fruit seller and you have a strong feeling that during the summer season mango prices will shoot up, this means you are “bullish” on mangoes. You could buy tons today, but that’s costly as well as risky, because what if you are wrong.

    Instead, you pay a farmer a small token amount and he gives you the right to buy 100 boxes of mangoes from him at today’s price, anytime in the next month. If mango prices double, you can sell them for a huge profit, but what if the prices fall, you only lose a small token amount.

    This simple agreement  is the options trading. And when investors use it to make profit from rising prices, they are using bullish option strategies. 

    What Does Bullish Mean in Options?

    In the stock market, being “bullish” means you believe prices will rise and go up. Instead of buying a stock outright, you can use options to act on this belief because:    

    • Low Costs: Like our mango example, you can control a large number of shares by just paying a small fee known as ‘premium’.   
    • Lower Risk (for Buyers): If your intuition is wrong and the stock starts to fall, you will only be losing the premium paid.

    Types of Bullish Options Trading Strategies

    Let’s look at the most common strategies used by investors when they are bullish in the stock market.

    1. Buying a Call Option 

    This is the most direct way to buy stocks during rising prices. In this you only pay a small fee for the right, but not the obligation, to buy a stock at a pre-determined price aka the Strike Price before a specific end date or the expiry date. Investors generally use this when they have strong feelings and they expect a big, fast jump in the stock price.   

    Advantages

    • Unlimited Profit: If the stock keeps rising, there’s no limit to how much you can make.   
    • Limited Loss: Your maximum loss is capped around the premium you have paid.   

    Disadvantages

    • Time Decay: This is the biggest challenge as the value of your option decreases every single day, like a ticking clock.If the stock doesn’t move up in time, you can lose your entire investment even if you were in the right direction.   

    2. Bull Call Spread

    This is for the smarter investors, where to reduce their initial cost, investors pay for the right to buy at today’s price but also sell the right to someone else to buy at a much higher price. Investors are still bullish on this, but they are limiting their potential profit to lower their initial risk and cost.

    In a Bull Call Spread, you buy a call option and simultaneously sell another call option with a higher strike price. The premium you get from selling the second option makes the whole trade cheaper.   

    Advantages

    • Lower Cost & Defined Risk: It’s cheaper than buying a call alone, and you know your maximum possible loss from the start.   
    • Reduces Time Decay Impact: Since you’ve both bought and sold an option, the negative effect of time passing is reduced.   

    Disadvantages

    • Limited Profit: Because you have already sold a call, your profit is capped. You cannot benefit from instant price rise once you sell.  

    Example: Bull Call Spread on Nifty 50, lets say the Nifty is at 18,000 meaning you are moderately bullish. You buy an 18,000 Call for a Rs.150 premium and sell an 18,500 Call for an Rs.80 premium. Your total cost is just Rs.70 (Rs.150 – Rs.80). This is your maximum loss. But here your profit is capped, the maximum you can make is the difference in strike prices (500 points) minus your cost (Rs.70), which is Rs.430.

    3. Bull Put Spread

    In this strategy you get paid upfront for your bullish view. In a Bull Put Spread, you sell a put option (your bet that the price won’t fall) and buy another put option with a lower strike price to act as insurance against a big crash. You receive a net income (a “credit”) for doing this. 

    Advantages

    • Upfront Premium: Investors get the money instantly in their bank account.   
    • Profit from Sideways Movement: You can make money in this even if there is no movement in the stock until and unless the stock price starts to fall.
    • Time Decay: As time passes, the value of the options you sold decreases, which is good for you.

    Disadvantages

    • Capped Profit: The maximum profit you can earn is only the net premium you received.   
    • Higher Losses: The maximum loss is usually greater than the maximum profit.   

    4. Covered Call

    This strategy is not for new traders, but for investors who already own the stock. In a Covered Call, you own the stock and you sell a call option against it. The shares you own are the “cover” for the call option you sell.   

    Let’s understand this from a quick example, think of it like owning a house, to earn extra money, you decide to rent out the top floor. You get a steady rent (the premium), but you agree that if someone offers a certain high price for your house, you will sell it.

    Advantages

    • Generates Income: Investors can earn a stable income by “renting out” their shares.   
    • Downside Protection: The premium acts as a small cushion if the stock price falls.   

    Disadvantages

    • Limited Profit: If the stock price shoots up, your profit is capped. You have to sell your shares at the strike price and miss out on the big rally.   
    • Downward Risk: If the stock price crashes, you still own the falling stock. The small premium you received is much lesser than the loss incurred. 

    Read Also: Top 10 Intraday Trading Strategies & Tips for Beginners

    Which Bullish Strategy is Right for Investors?

    Choosing the right strategy depends on how bullish you are and how much risk you’re willing to take.

    ParameterLong CallBull Call SpreadBull Put SpreadCovered Call
    Market View“This stock will rocket up!”“This stock will go up a bit.”“This stock will not fall.”“My stock will stay flat or rise a little.”
    Maximum ProfitUnlimitedLimited (Defined)Limited (Net Credit)Limited (Capped at Strike)
    Maximum LossLimited (Premium PaidLimited (Net Debit)Limited (Defined)Substantial (Stock can go to zero)
    Best ForHigh-conviction bets on a big, fast move.Betting on a rise with low cost and defined risk.Getting paid a premium for your confidence.Long-term investors wanting extra income.

    Conclusion 

    Options trading is a strategy where knowledge and discipline are utmost required. As a beginner, your first goal should be to secure your capital. Start with paper trading or an amount of money you are fully prepared to lose. Bullish options strategies can be a powerful tool to expand your income, but they also come with attached risks to it. So knowledge and experience with right timing shall always be considered. 

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1What is the Best Time Frame for Swing Trading?
    2MCX Trading: What is it? MCX Meaning, Features & More
    3Silver Futures Trading – Meaning, Benefits and Risks
    4What is Crude Oil Trading and How Does it Work?
    5What Is Day Trading and How to Start With It?
    6What are Option Greeks?
    7What is Spread Trading?
    8What is Implied Volatility in Options Trading
    9Call and Put Options: Meaning, Types, Difference & Examples
    10Bank NIFTY Intraday Options Trading: Steps, Strategies & Tips

    Frequently Asked Questions (FAQs)

    1. Is Bull Call Spread and a Bull Put Spread different from each other? 

      Yes, with a Bull Call Spread, you pay a small amount (a debit) and need the stock to rise to make money and in Bull Put Spread, you receive a small amount (a credit) and make money as long as the stock doesn’t fall below a certain price.

    2. Shall stocks be bought during the bullish market?

      Buying stocks exposes all your investment to direct risk as buying stock requires money upfront and this money can be lost if the price starts to fall. However, Options offer a lower-cost way to trade with a defined, limited risk, but you are also fighting against time decay.

    3. How much money is required to start options trading?

      You can start with a few thousand rupees as buying a call or a bull call spread can be cheap, though selling a bull put spread requires a margin from your broker, which can be around Rs.1 lakh or more. A covered call requires the most capital, as you must own the underlying shares first.   

    4. What happens if the bullish feeling is wrong and the market falls? 

      In Long Call or Bull Call Spread, your losses are capped to the net premium you pay. With a Bull Put Spread, your loss is also limited but can be larger than the premium you received. With a Covered Call, you face the full risk of the stock price falling.

    5. Can positions be closed before expiry? 

      Generally investors prefer to close their positions before the expiry date to lock in profits or cut losses. Waiting until the last minute can be risky as sudden price moves can erase your gains.

    • Open Free Demat Account

    Join Pocketful Now

    You have successfully subscribed to the newsletter

    There was an error while trying to send your request. Please try again.

    Pocketful blog will use the information you provide on this form to be in touch with you and to provide updates and marketing.