Index options MIS/NRML

[amit9]

Can one convert Nifty options to MIS and NRML and vice-versa ?

[t7support]

Zerodha imposes restrictions on the same. Many Other brokers don’t have such restrictions.

How to convert MIS to CNC/NRML and vice versa?

[marketghalib]

Due to broker-level OI (Open Interest) restrictions from SEBI, Zerodha does not allow option buy position conversion from MIS to NRML and displays this error: Position conversion from MIS to NRML is not allowed for index option buy positions.

But one can convert from normal to MIS

[t7support]

@marketghalib

Due to broker-level OI (Open Interest) restrictions from SEBI, Zerodha does not allow option buy position conversion from MIS to NRML and displays this error: Position conversion from MIS to NRML is not allowed for index option buy positions.

How does OI restrictions affect conversion from MIS to NRML ? I can simply exit my MIS position and take a NRML position and influence OI which is not restricted and hence am unable to understand this logic. Please throw some light.

[Meher_Smaran]

Hi @t7support

@t7support

I can simply exit my MIS position and take a NRML position

Yes. This can be done.

We are not allowing direct conversion for allowed strikes due to technical limitations.

[t7support]

@Meher_Smaran

We are not allowing direct conversion for allowed strikes due to technical limitations

Pls elaborate. What is the technical limitation ?

[Chirag1]

Must be the 3rd party OMS

[t7support]

Most brokers use third party OMS and allow MIS / NRML conversion. So that ain’t the difficulty…

[VijayNair]

@Meher_Smaran

due to technical limitations.

All kinds of limitations. The name “Zerodha” has become a misnomer

[Prakashsingh]

I guess this has go to do with exchanges

[t7support]

Other brokers are also members of the exchange right. They allow MIS / NRML conversion. So it ain’t the exchange

[Meher_Smaran]

That’s right, @t7support - But the main hurdle in this is the OI limit.

We allow using the MIS product for all the strikes. Whereas the NRML type is applicable only for allowed strikes due to the well known OI limit issue. In order to avoid the issue of MIS not getting converted to NRML for strikes out of the allowed range. We allow conversion of NRML to MIS but not vice versa.

Do note that for hedged positions, we allow position conversion.

[t7support]

@Meher_Smaran

We allow using the MIS product for all the strikes. Whereas the NRML type is applicable only for allowed strikes due to the well known OI limit issue. In order to avoid the issue of MIS not getting converted to NRML for strikes out of the allowed range. We allow conversion of NRML to MIS but not vice versa.

Do note that for hedged positions, we allow position conversion.

1. Those who want to take hedged position doesn’t get margin benefit with zerodha at order placement time. User cannot buy the OTM option first and then sell. User has to first sell with higher margin and then buy to release excess margin.

2. Selling options has no strike restrictions even though it is unlimited risk to the broker and user. Selling naked options also increases the OI but it is allowed. Option buying with limited user and systemic risk is but restricted.

Am CRED curious @Meher_Smaran

[VijayNair]

@t7support
Yes indeed. The name Zerodha is a misnomer like I said. Better name would be "OnlyRodha - The Limited Broker"

Not by design, but it does keep margin utilization under good prudent limits.

[t7support]

Rodhas are for no one’s benefit. Those who have to burn cash will continue to do so inspite of rodhas. Active traders whose life is made difficult by rodhas will simply jump ship.