With just 1 million RS in my broker account, I can sell 1 lot worth 6.9 million (15*46000) bank-nice.
Imagine a black swan event where Bank Nifty moves 20% in 1 second (nuclear or technical bug, whatever the reason). You will lose 138,000 yen. 38,000 more than what I have in my broker account.
How can I prevent my broker from asking me more questions than they present me?
Trading using a company account will declare the company bankrupt and you won’t have to pay anyone $38000. My personal property is protected. However, due to regulations, you cannot trade using a company account.
Are there other ways to protect personal property from trading losses?
Hedging trades. Buy PE in this case. Of course, it’s not a free lunch, it’s a premium you pay. (like insurance)
So far, OTM isn’t too expensive for Black Swans.
These risks exist in written options/futures contracts, but they are limited when options are purchased.
(Crude contango has only ever happened once)
No, it’s not about protecting yourself.
I’m talking about what an outside broker can do to protect it like a company formation.
Purchases such as OTM PE can always fail due to technical bugs etc.
Of course, even when trading with my company, I do my best to avoid losing money and buy hedges. But even if the probability is 0.0001%, I want a solution that will protect me.
I am looking for it in case it dies.
I don’t need life insurance money, etc. If you find one, please let me know…
THE BUYER IS ONLY AT LIMITED RISK.
no. Let me give you a recent example.
Some option buyers tried to place Sensex settlement orders. Not placed. They repositioned them 2-3 times. And after some time all orders were fulfilled. Therefore, the technical risk also makes the buyer’s risk unlimited.
You are talking about software-based glitches. It is not based on transactional aspects. Nevertheless, this method also limits the buyer’s risk.
From the purchase price to zero.
Doctor, would you be interested in creating an insurance product for Kite where the user agrees not to charge more than the amount deposited into the broker’s account?
Example: If a user deposits 1 million INR into Kite and loses 1.1 billion INR due to some reason (black swan event, technical bug, etc.), Kite’s account balance will be minus 10 million. Basically, the user will pay you a loan of 100,000 yen. But using insurance waives that amount and resets your account to zero.
SEBI has good margin rules, so it is possible that no one will need to claim insurance. But for paranoid people like me, it will bring peace of mind. “
No, there is no such insurance.
But this is what we shared last December.
The net worth of our business today is around 30% of all funds our clients keep with us at any given time. With 30% equity as a percentage of total client funds traded, we are probably one of the safest brokers in the world in terms of capitalization. In addition, we have continued to operate debt-free from the beginning.
Even if all your customers somehow lost 130% at the same time, your business would still be fine.
@nithin Yes, if possible, I would like you to consider creating that insurance product. More revenue for you and peace of mind for individuals.
i think you misunderstood. If I lose 130% for any reason, I will only pay 100% and Zeroda will cover 30% if I have insurance.
In no event is the broker authorized to operate any type of insurance product.
Thanks for sharing the sensex example so I can share my experience. The other day I also had a problem exiting the sensex option due to volatility.
Once one sell order is entered into the system, the rest of the sell orders will not be executed for the buyer up to the maximum amount of equity. It’s insurance for the buyer. There is no safety net for sellers if they are bucking the trend.
I would like to create a scenario where I can allocate a certain amount of funds to specific transactions within Zeroda regardless of my overall balance. But I don’t think other brokers do that.