A look at SEBI rules: Saving investors or Destroying Investors. | Stocks and Commodities

A look at SEBI rules: Saving investors or Destroying Investors.

1. SEBI increased the lot size in F&O from Rs 2 lakhs to Rs 5 lakhs.
2. The reason given was that it wants to stop the retail people who take speculative positions in F&O.
3. But those who know the human behaviour, a gambler is a gambler.
4. Since the minum contract size is Rs 5 lakhs, when prices appreciate, contract size increases significantly.
5. Let us look at ITC, it is a Nifty 50 stock, it is a Defensive stock not Cyclical stock.
6. Yet the contract size was more than Rs 8.5 lakhs.
7. One of my friends who was bullish in ITC went long, yesterday he lost more than 1 lakh in single session.
8. Had the contract size been around Rs 2 to 3 lakhs, he would have lost much less.
9. Those who can not come out with huge margin due to increased contract size, turn to Option buying as buying of option does not require huge margin money.
10. Then, uniformly they lose. It is a well known fact that people can not make money consitently in Option buying unless t you have super skills.
11. NSE revises the contract size to factor in appreciation or depreciation in stock prices only once in 6 months.
12. At least that they have to do once in two months or three months.
13. Due to huge margin mrgin money, many retailers become option buyers from option sellers, so there are more buyers than sellers and hence demand and supply favours option sellers.
14. In totality, this SEBI rules make "Rich becomes Richer and poor becomes Poorer"