We sometimes get this error:
RMS:Rule: Option Strike price based on Ltp percentage for entity account
As I understand this is because of the dynamic percentage from the spot, but many times this percentage is very low
At the time of writing this, the limits are as shown below when Nifty Index is at 9039.
Nifty contracts allowed for trading: Current Week- 8900 TO 9200 CE & PE All other expiries- 8500 TO 9550 CE & PE
From my perspective, this disallows safer deep OTM strikes which are 2SD (95% OTM probability) for a monthly position. And based on the current week limits it disallows even 1SD/68% OTM prob strikes. Even if we could get the strike for the option sold, it is usually very close to the limit and makes it impossible to hedge it because of this limitation. And further with the June2020 margin reduction, these kind of hedged trades become more profitable.
BharatW gives an explanation on this forum:
If I interpret this correctly, this happens because Zerodha as a broker has become too big - is that correct? If yes, how does Zerodha plan to resolve this?