Crucial Problems in Brokers Regarding Put Spread and Call Spread

AliceBlue →

Note - We are a partner of Aliceblue.

Let’s say BankNIFTY is trading at 32500.
Suppose You have sold 30900PE and bought 30700PE.

It will take a margin of 21271.64 INR as we are speaking. It is lowest in the industry among other discount brokers except for Upstox which takes almost the same or similar.

Fyers

Fyers is the industry’s most shit broker who will ask more than 1 Lakh margin for the first lot but will not take any margin in the second lot?

Zerodha

90% time 30700PE will stay blocked. So You need to have enough margin to sell 30900PE first and then buy 30700PE. Bummer!

Problem with Small Accounts →

Now, Imagine BankNifty fell 1000 points. Despite our maximum loss is limited to an amount let’s say 3000 INR. The problem will happen backward.

The margin will increase almost double. So a 30K account having 21K margin blocked will goto negative margin totally. And, Suddenly the RMS will close the sell leg leaving the buy leg open.

If the market reverses now, Your account will have a chance of total vanish now. So, there is a huge chance of having more loss than the maximum loss.

Special Problem with Alice →

Suppose a spread became ITM and encountered maximum loss but Alice will not let you hold it and take it to the delivery. It does not allow delivery at all on Thursdays because it had encountered issue once with the exchange on settlement.

It will auto square off and as ITM is illiquid, it will end up with funny results. Sometimes, loss trades get exited in huge profit, and sometimes it gets exited even in more loss than the max loss.

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Note, We are partners of all the brokers mentioned here so the review is not biased.

Apart from these, Read this article https://unofficed.com/theta/how-to-choose-the-best-broker-for-options-trading-in-india/

Apart from these, I explored three more brokers - Angel, 5Paisa and IIFL.

5paisa also have problem like Fyers do. Their exposure margin is unnaturally high but not high like Fyers. IIFL and Angel I have started rolling on API recently. Previously I used to work only with dealer terminal as all the clients I had were not retail.

I will update on IIFL, Angel (and also ICICI.) after few weeks.

PS: Upstox was beast and best before they decided not to focus on being brokers but on customer acquisition.