Thank you for your prompt reply.
As for the broker, I heard from Webble that they are currently not allowing Indian residents on their platform. Please correct me if I changed it recently.
Interactive Brokers also does not allow trading options on U.S. stocks. They are? Tradestation, a subsidiary of Interactive Brokers, allows options trading in the US, but charges very high fees.
For CA inquiries, please continue to let us know once you have received formal confirmation from the CA. Alternatively, declaring income from foreign options trading to the ITR is less hassle.
thank you,
Madhu
Addendum: I tried to inquire just now, but it wasn’t. Indian resident accounts are not supported. Sorry for suggesting Webull.
Yes, I heard about interactive brokers from one of my friends. I don’t know why as they support India and also say they allow options trading on their website for cash accounts.
I also have one friend who uses Tradestation for day trading options. And yes, their fees are very expensive. I do not recommend getting Tradestation. I recommend TD Ameritrade.
I’ll do it, brother. In any case, you should inquire about this.
After checking with them, I called the interactive broker to inquire if they allow option trading for Indian residents. They said it was not allowed and their website says the same.
Remember to update your findings here.
thank you
Madhu
yes. I inquired about this as well. Apparently the option is not allowed.
of course! I will continue to post here.
Hi, do you have any updates on the findings? Thanks
According to my understanding of IT law, derivative trading is not speculation. Is it your personal opinion that trading derivatives is gambling?
It’s a fact, not an opinion. If you’re good at it, it’s like professional gambling.
Even though many retailers turn to gambling in hopes of making big bucks, I don’t entirely agree with the idea. If you have a reasonable target of 1% or 1.5% monthly interest rate, consider it not only achievable, but also safe. Gambling is probably like hero or zero player. In that sense, stock trading is also gambling. A friend of mine bought Quality Ice Cream stock for about $1 million, less than 10% of that amount. He hasn’t sold yet in the hope that one day it will go up. It could go up, of course, but the point is that it has years of losses. Even if it makes a profit, it’s pure gambling.
Hi, did you find the answer? I am in the same position and would like to clarify if US earned income (for NRIs) can be used to trade covered calls and long positions from India… (Indian tax after becoming a resident)?
Let me share my findings here:-
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If you are a resident of India and have never had NRI income (i.e. still outside India), then you are out of luck. Thanks for playing. You are troubled by two things about her:
- LRS (margin transactions cannot be sent)
- According to the latest RBI notification number FEMA.399/RB-2020. Link. Resident Indians are not allowed to post or collect margin without prior approval of RBI (except in a few cases). The terms Margin and Derivatives are clearly defined by the RBI in this Notice. So don’t be fooled if you manage to open a cash account in the US with Level 1 and Level 2 options trading strategies available. In my opinion it’s not a gray area. It’s pretty black and white.
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Even if you are a resident of India and earning income as an NRI, RBI notification number FEMA.399/RB-2020 still applies as it applies to all residents of India. In addition, we cannot accept margin account approvals from brokerage firms such as IKBR, First Trade, etc. Here is the response from First Trade:
“Apex’s policy change will be made in accordance with the updated Liberalization Remittance Scheme of the Reserve Bank of India, which includes “remittances for margin or margin calls from India to overseas exchanges/overseas counterparties” in effect. Contains prohibited items.
Since this policy is implemented at the clearing firm level, brokerage firms cannot circumvent it even if they want to.
I am planning to set up an LLC.under this notice hereI believe that a resident individual can form an LLC abroad. The remaining questions are:-
- Can this LLC enter into derivative transactions with NRI-earned funds (not using LRS)?
- RBI Notification FEMA.399/RB-2020 states that prior approval from RBI is required before dealing in derivative contracts. How do I get that approval?
I asked both of these questions RTI vs. RBI. I don’t even know how long RTI will take, or if I’ll even get a meaningful response. But regardless, I’ll post an update here.
Disclaimer:- I am not a legal expert by any means. Don’t listen to strangers on the internet. Find out for yourself.
My personal opinion – I think it’s very unfair to tell people what to do with their taxed money and how to spend it. If someone wants to make the wrong decision, they should be allowed to do so. It’s freedom. I’m not going to argue. Agree to disagree. Feel free to comment on the above.