If a scrip is under f&o ban, new or fresh f&o positions is not allowed to create but one can Square off his/her existing f&o positions…
But there is no restrictions in the trading of the scrip in the equity segment…
But still the value of the f&o contacts can move as normal trading is on in the equity cash… So there should not be any harm for the traders having open f&o position…
So the main reason of f&o ban is just to restrict creation of new open positions to reduce speculation???
Essentially yes. Any scrip trading in F&O segment will have a limit set, known as Market Wide Position Limit, whenever this limit reaches 95% stocks enter ban period and no fresh positions are allowed. Though, you can square-off your existing positions. You can learn more about this here.
more shorts & longs positions will be created than existing stock numbers, when the stock become out of ban.
then how security lenders will deliver the stocks at the time of delivery? the situation will be like short delivery.
