Contract value and quantity freeze limit implications on options trading?

General
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  • Is there any limit on the number of options contracts that one can purchase at a time?

  • If not, then does each option contract have to be placed separately? Or does the trader just place the amount he wishes to purchase and zerodha will then execute it as different orders simultaneously so as to not exceed the contract value limit set forth by the NSE? For example if I want to cumulatively purchase option contracts worth 60 lakhs on the NIFTY Indices, but the NSE limit per contract is 2 lakhs, then can the trader just place one order for 60 lakhs where it will be executed as 30 orders of 2 lakhs be default or does the trader have to physically place 30 orders of 2 lakhs?

  • what are the overall implications of the quantity freeze limit on an options trader? for example the limit for the nifty indices is 7500? does that mean a total of 7500 option contracts can be purchased (i.e. 7500 call/put option contracts)? or does that mean that the total number of shares within all the contracts purchased cannot exceed 7500 entirely (i.e. 75 options contract which have a slot size of a 100 each)?

  • Regardless of the implication of the quantity freeze limit, does an option trader have the luxury of investing as much as he/she chooses? or is there a limit to how much they can purchase overall in terms of the value? for example if he has 50 lakhs or crores does he/she have the luxury of spending it all on purchasing options?

2

Little confused with your question, hopefully this helps:

A single individual can’t hold more than 2.5% of the total open interest on any future or option contract. So if the open interest is 1lk lots, you can’t hold more than 2500 lots.

The 7500 or 300 lots limit is on your order size. This means that you can buy not more than 7500 or 300 lots of Nifty options on every order. But you can place multiple orders to take much bigger positions.

1 Like
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hi nithin, I’m almost completely new to the entire trading game so it comes as no surprise that my question made little to no sense :P. But thanks for your reply, it has cleared it up a little bit :). But can you tell me if on an online trading interface such as zerodha can one place multiple orders simultaneously by simply putting in the figures once? or does a person have to reenter data and execute an order separately for every order?
Another thing if you can clear up for me is does the open interest limitation of 2.5% apply only to simply individual firm options or does it also apply to indices such as nifty or sensex?

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oops i suppose it should be 300 lots …

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Firstly 2.5% of open interest usually will be in a few thousand lots. So unless you are a super rich HNI, don’t worry about that limit. :slight_smile: If you want to buy 15000 Nifty, you will have to place two orders of 7500 separately. You can also use this functionality called Basket orders, check this: http://zerodha.com/z-connect/tradezerodha/zerodha-trader-software-version/basket-orders-zt

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Muthu, thanks, corrected :slight_smile: