We all are trying to increase our knowledge sir nothing else. I am still very curious about this process. I wish ST would clarify things even more as to what difference will it make if one person or several person give brokerage? and whats even the use of that? and if the trades do take place why doesn't it reflect on the exchange?
If I want to take a position, I tell the guy that handles the transactions & settlements to take a position on my behalf....he will give me that position at a premium or discount depending on market!
Say 9500 CE is priced at 310...he will either charge a premium 350 or discount 280 and he gets to keep the extra amount charged! In return I have to just pay upfront 10% of the total buying/selling Options value.....This guy may buy/sell on same day or next day or anytime suitable for him. But he has received 10% of the value from me and he will honor his word as I will mine.
And since I can keep position open with him, he will deduct brokerage ONLY from profits when the trade is in profit. If no profit, nothing to pay additionally till profits booked :thumb: And expiry is pretty far...so no problems!
Whats so difficult to understand ?