Angel One: Metamorphosis into a Fintech? (Previously Angel Broking)

Yes, I am also confused. It’s good that I didn’t sell anything.

Angel One has 65% of revenue coming from broking. Out of which, 85% comes from F&O. This means broking has impact on 65% of the revenues.

But, here is what I can deduce from today’s movement.

1. There is no overhang on the stock anymore. This is a classic situation of threat being more powerful than execution.

2. There is some chance that traders will absorb the changes. My hypothesis is following –

• Lot size increase will impact the option buyers less compared to option sellers. Lets say buyers have money enough to buy 25 unit lot. Let us say now the lot size is increased to 60-65 to meet 15 Lac criteria. The buyers can either bring more money or go for call/put options which are cheaper. (Slightly far away ones)
• The sellers are typically a bit large ticket-size traders. They may absorb the increase in lot size. The traders who have money for one lot only, may switch to buying side.

My take is that the impact can be limited also. There is a chance and we know how addictive F&O trading is. Even after all this, there will be some impact for sure and only time will tell how it pans out.

But I feel retail will lose more after this because of demand supply mismatch. More buyers, less sellers leading to higher option premium. Retailers being forced to buy far away options.