It is difficult to sell option on commodity expiry day when zerodha doesn’t allow any buying orders. With the kind of volatility, without hedge selling option in commodity is dangerous. Request to allow buying at least to the number of options sold. @Ragavendran_M
@Ragavendran_M @siva Please check this. Need the option to buy at least equal to option sold. Margin for option sold is anyway blocked.
Which commodity you are referring here?
Silver and gold among others
On the option expiry day, options will devolve to future. Allowing option buy only with premium is carrying larger risk if position left open and devolve to future next day. If you want to hedge you can buy/sell the future contract directly on the expiry day or one day prior to expiry you can buy the option…
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Charge margin of future but allow option buy. What is the rusk then.
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If you are not able to exit it due to liquidity or any other reason. Next day in big gap up or gap down you can loose a significant amount. Maybe that’s the risk here.
In that case futures itself shouldn’t be allowed right. Any day of the month.
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Commodity ITM options require to be devolved into futures. On the date of options expiry for a commodity, spreads tend to become higher, making it difficult to close large number of positions at fair price. Zerodha needs to close a large number of positions during that time, as many clients wouldn’t have sufficient funds for devolvement. I believe that’s the reason of not allowing buy on expiry. You can sell on expiry, and even buy using MIS (for many scrips in MCX).
Thats why i am telling to take margin as if future is being traded but don’t block buy. I am unable to take any expiry day option sell without hedges be it inside hedge for ratio or otm to otm 1 to 1 hedge. Instead of blocking buy, needs to address the problem with it if it devolve into future. Problem like u said is the customer may not have fund for future as buy trade involves very less margin. So we can address that by having appropriate margin required rather than allow naked selling without hedges.
@nithin request you to please address this concern. Appropriate margin can be blocked to safeguard zerodha rather than blocking option buy specially for hedging by sellers.
Currently, this is a work in progress. Once testing and implementation are completed, we will share an update here.
Approximately 3-4 weeks is what we are currently expecting