"Bank Option" Order Getting Rejected

Same issue I faced today and yesterday as well. Something is not right.

this limit includes all strikes and futures, whenever you face such problem try some on at the money or futures, your doubt will be clear.

that’s what i wanaa say, their limit is 15% and brokers limit is another 15% not same.

support answer are unsatisfactory to majority of people, their answer are just as reading a written statement.

Alright… I will try this.

Yes, I received the same reply from Zerodha support staff that the 15% quota calculated at that point in time has be reached for Zerodha so my far OTM Bank Nifty order got rejected. They advised me to chose a strike within 300 points of current Bank Nifty spot price to avoid this issue. I told them that my strategy does’nt permit to chose a strike so near to the spot price, so they advised me to try out Nifty options where this restriction does’nt apply.

I am able to buy the BANK NIFTY WEEKLY CE OPTIONS but when I try and place a BUY order for the BANK NIFTY PE OPTIONS, the order is getting rejected and the following message is being displayed , “RMS RULE : OPTION STRIKE PRICE BASED ON LTP PERCENTAGE FOR ENTITY ACCOUNT ********* ACROSS EXCHANGE ACROSS SEGMENT ACROSS PRODUCT”

May I know what is the issue here??
Regards.

you could have asked them when 15% reached how near strikes options and futures are getting executed on same terminal.

I am worried as I am also working on a strategy involving OTM options.

The RMS error should be coming from Zerodha.
It looks like Zerodha is not allowing trades in deep OTM options.

Can you tell me what the value of Bank Nifty when you place the order? and What the order is? Is it buy or sell / limit order or market order?

My wild guess… Zerodha put a rule on their server not allowing Bank Nifty option trades when the strike price is more than 2% away from LTP of bank nifty. Possibly they put this when weekly options where introduced and did not remove it later. May be a client account created some time after BNF weekly option introduction does not have this rule.

Or Zerodha is being bad… they somewhere calculate notional value of options for some limits and decided not to allow otm bnf options… which would breach their limit.

Or Zerodha is being too good here… they put a rule disallowing clients from trading bnf otm options… may be zerodha saw too many clients lose too much money. :grinning:

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Can you check what was % of the (Strike - BNF LTP) to Strike? I guess there is some arbitrary limit of 2 or 2.5% by Zerodha.

edit: I tried buying option whose strike was 1.85% away from LTP. But order got rejected with the same error.

I tried buying OTM option and got the same rejection error. This does not look like a limit imposed by exchange. I believe Zerodha has some arbitary RMS rule which blocks buying OTM options. @nithin should investigate this seriously.

I am working in a strategy which involves buying deep OTM option as hedge. Looks like I have to go to a different broker. :hushed:

Yes, they said it’s a rule… I did’nt see a point in arguing with the support staff as he was just an employee following the rules laid down by his organization, he does’nt have any powers to change things anyways…

it would be difficult to execute with Zerodha… I tried selling 500 points OTM strikes but it gets rejected repeatedly despite having ample margin.

:smile: I don’t think they are being bad… I guess it’s some exchange defined rule to limit BN open interest exposure among it’s trading members. It’s just that Zerodha has become very big/crowded.

From: https://www.nseindia.com/products/content/derivatives/equities/position_limits.htm


Index Options
The position limits of Trading members / FPIs (Category I & II) / Mutual Funds in equity index option contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index option contracts. This limit would be applicable on open positions in all option contracts on a particular underlying index.

So why would Zerodha block OTM option trades? May be they are doing it proactively to ensure that they dont reach the limit. But it is definitely not good for traders.

do RTI, ask @nithin about cause;
such problem 1st 2nd 4th largest stock broker in India; guess No;
so;dig deep for truth

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found this:

IS there a solution to the problem. I am unable to go in far OTM. The problem has been more chronic in recent days/weeks. Any suggestion/idea would be welcome

  1. As you are closer to expiry, the OTM options will be unavailable, plan your trades accordingly.

  2. Most of the times I have felt its a blessing in disguise only, dont chase options just coz they are penny priced, it wont work mostly.

  3. @nithin has mentioned in another thread, they are trying to make another Zerodha membership with NSE, so there is more option contracts available for us, and once that is done, this issue may be lessened to some extent.

Kite used to be smooth platform. now its no more like that.
even after taking position in ITM PE i was notable to put sl [as order kept rejecting] . in the end lost 80 point.

To zerodha team please do something about it. now even market was going up in last 1hr 15 min i was afraid to take new position.

does this mean we can trade in other brokerage as their 15% will not be reached because of low customer base

Yes you r right, new brokers having low client base easily give opportunity to trade far otm option even on expiry day of bank nifty without order getting reject. For a client base and volume like zerodha I don’t think even two account at NSE are enough. :slight_smile: