Did market type order when there is no buyer available will get our trade executed in option writing and how much price difference we got in market order from the price shown on our screen?

General
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When the market order is placed for writing options, initially it will in pending status. As soon as any order is placed for buying it will executed at that price. Regarding price difference from the price shown in screen certainly it will differ.

These conditions will appear when the premium are in circuit breaks, So the execution price will depends on the buy price.

1 Like
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Why there is a negative vote for this?
I have upped it.
Good question nishant.

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Praveen , what do you mean by premium in circut breaks, and if i said very high open interest and very high traded quantity but traded quantity of same level as of open interest , will market type order helps in buying and selling and whether we can even got 30% approx higher or lesser price in case of buy and sell in market type order?

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@praveen
Won’t the exchange revise the price immediately when the option premiums reach Daily Price Range Circuits? I thought F&O have no circuit limits but Daily Price Ranges are set to avoid wrong entry of price values.
Also, I belive when there is no buyer available and when options are written as market order, it will be placed as limit orders under lower price range. Correct me if I am wrong?
Situation like no buyer available may not be always due to circuit hitting, it is very common in deep OTM options, where nobody would be interested to buy that option.

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Yes, premium of the options also will hit daily circuit breaks when there is a huge movement or one directional move of the underlying prices. Exchange will certainly revise the circuit prices range of the options, once prices are revised & buy order flows the selling market order will execute @ the best available price, may happen @ low price or high price. To my knowledge the market sell order will be pending as a limit order at the upper range of the price.

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Yeah sorry about that.
But I still believe Sell order will be placed at lower price range
and buy order at upper price range.
Also when sell order is at lower range, when buy order flows, the order will execute at lower price range itself, if I am not wrong.

Please confirm, in this case wont the buyer get advantage of buying at the lowest price range!

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aastroguru , i am not understanding about the concept of upper price range and lower price range , can you please explain it me with a illustration and aastro guru please can you answer my first comment question which i added after parveen answer my question

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aastroguru , one more thing if there is very good open interest quantity example 400000 and same traded quantity as 400000 , how can we make sure that our order also get executed, will market type order or placing limit order above the price going in market help us in executing our order?

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Do you know in equities, we have circuit limit for stocks.
Upper Circuit Limit and Lower Circuit Limits.
They are set as 10%, 20%, 30% and no limits, In 4 categories.
F&O stocks have no limits.
When the price reach a circuit limit, trading stops in that particular stock for that day.
Nifty also has circuit limits, but it rarely hits and trading discontinues for few hours.

Similar to F&O stocks, which do not have circuits, their option prices also do not have circuit, it can freely move up or down like the underlying stock.

But what exchange has done is that, in order to prevent wrong entry of price values while placing the order, NSE has set a limit for futures and options too.
For futures it is a fixed % on yesterdays closing price.
For options it is a methodological calculation of the price range which varies widely and do not follow a certain % from yesterday’s close.
So the orders can only be entered within this range, and when you type any value outside this range and place an order, it will be immediately rejected by the exchange (to prevent erroneous entry of price, safety system).
This Lower Price and Upper Price is called, Daily price range.

For example you have bought an OTM option at 0.6 rupee during expiry day and the option price has died and settled at the least value of 0.05.
Now there are no buyers (no one would want to buy at 0.05 and sell at 0.05, since brokerage and other charges would be a loss to them.)
Since there are no buyers, if you place a MARKET SELL order, the order will be converted to LIMIT order and the LIMIT price will be set as the Lowest Price Range which is usually 0.05 for such low premium options on that day.
Hope u understand!

How to check daily price range?
You should oprn the option contract’s Snapquote window or Scrip Info window, In that you can see the Daily Price Range or Upper Circuit Limit or Lower Circuit Limit.
This is price within which trading on that day will happen

Regarding your first question
I dont clearly understand what is your intention of linking OI value, Traded Qty and execution of your orders.
OI value and Traded Qty is separate and gives only guidance to whether enter the contract or not.
I dont understand what it has to with execution of your order.
If there are buyers available and you place a market SELL order, it will be definitely executed regardless of OI or Total Traded Qty.
If there are no buyers, there could be a problem.
Before placing the market order, you can easily check the availability of buyers in Market Depth window. If there are buyers at good price range, go ahead and place the order.

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thanks brother , but can you also answer my question of same traded quantity and same open interest question?

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I have answered above.
Same traded qty and same open Interest means all the contracts have been opened today, Isn’t it?
So the sell orders will only execute when fresh buyers come in, Isnt it?
Sorry Nishant, I am not very good in option theories. I was trading on equity cash market so far.
Just now started options, I am not able to give a better answer.
May be you ping Karthik and ask.
But better be clear with your question with example values or snapshots.

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i just watch a option contract aastro, in that contract RCOM has 1100000 OI and same traded quantity , but the contract turnover for the day already is 20 crore , from that i thought there is enough avalability of buyers in market depth , isnt it because if the contract is traded only once , the turnover should not be more than 1 crore , isnt it ?

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Sorry man, I couldnt get you. Leave it. Let someone else answer.
I just opened the RCOM option chain, could not identify the contract what you are talking about.

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@ AastroGuru, No when order is @ market , this mean your are ready to give or take at any best price available, so can’t say it will execute @ lower rate only. There are little chances of sell order executing at lower rate & vice versa.

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Open interest mean the total contracts open in that particular strike price of that underlying stock. Traded qty will not be the same everyday, no matter what the open interest is ! So on any given day if it matches it doesn’t mean all the contract open are closed, in that case open interest for next day will be 0. Traded qty will describe only that day qty traded, this will include intraday trade & overnight positions as well…