I appreciate your patience for all clarifications. Now I get your point. In every scenario, margin benefits will play its role. But only concern is a huge capital is required in time of execution, Indirectly which reduces the (shorting) capacity, which will automatically cap any trader’s earnings. So in practical field there is no way to increase the ROI. Right…
Otherwise, have to be little tricky by… First Short then Long, again short then long… To squeeze the margin benefit and use for the next round… But it will not only be cumbersome, it will also increase the expenses of repetitive trade orders…
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As said there is no netoff in OI, we are providing to take longs because at least people who has shorts should be able to hedge their portfolios.
Shubh,
the original poster posted a screen shot that said “Nifty contracts allowed for trading 10850 to 11500 CE and PE”
Doesnt that mean you wont be allowed to short outside this range either?
Are you saying ( taking the above allowed range as an example) if I sell a 10500 PE the system will allow me to do that? Post which it will also let me buy a 10300 PE for example which is way OTM?
If the solution was so simple why does another thread say that some clients were migrated to Orbis as a solution?
The original poster in the thread above had a short position and was trying to enter a long to hedge his overnight position and the system wasnt letting him buy OTM
Please clarify
Thanks
@_satya
You can Short any Strike option there is not restriction on that . But to buy an option there was restriction .
Zerodha is now allowing to buy options of any strike provided there is a short option , which was not there when I created this thread .
The other alternative is to swtich to orbis .
Thanks for your inputs Suhas.
Just to make sure i got it, if you want to only buy an option then you are restricted to the range, but if you sell an option then there is no restriction on how much of an OTM hedge you want to buy?
So even if I short an ATM/ITM option I can buy a far far out OTM without any restriction?
Thanks
There are no restrictions on Shorting Options, you can Short at any Strike.
Yes, you can do this now. If you take Short position outside Allowed Strikes, the system will let you take Long position equal to lots you have Shorted.
This is new development, the comment you have linked to is old.
@ShubhS9 @siva
The restrictions are on buying options, Right?
But If I sell option outside range, then I am allowed to buy outside range to hedge!
Now obviously we will want to buy further OTM only to hedge.
So, is there any restriction on strikes and quantity then?
If I sell option 1000 pts otm, will I be allowed to buy any strike like from 1500 OTM?
Also if I sell monthly, will I be allowed to hedge, using weekly?
Yes.
You can.
Once you have taken Short Position you can take Long Position at any Strike, but quantity should be equal to the quantity you have Shorted, not more than that.
@Siva can you clarify this.
It is like a consolation prize to the traders, never mind if I’m wrong… Though Zerodha’s intention might be good to give the priority to the option sellers to protect them from huge losses over those buyers who (who thinks trading just like casino or jackpot) drastically reduces Zerodha’s OI quota only to test their luck by spending very little amount like purchasing a lottery ticket…
Obviously it is appreciable move from the end of Zerodha. But, while real intention behind is welcoming, the execution hazard diminish all the good intention ultimately at the cost of common traders ironically whose interest Zerodha is intending to protect.
Guys, can you see the implications of this type of restriction and round the way allowance? First you have to take short position that means you have to keep ready first around Rs 13.71 lac for shorting of 10 lot Nifty. Then when you go long you will get the margin benefit of around 8.61 lac (around 5.1 lac will be blocked as margin)… So long you are keeping your excess money (almost 1.5 times more than you actually need for trade) Idle there is no problem… But what will be ROI? will you calculate your profit against your investment amount of Rs 5.l lac or rather Rs 13.71 lac?? Could you understand my point? I attach below the screenshots of two calculations that I have checked with Zerodha Calculator.
Yes, you may argue here that after taking position you can utilise this benefited amount for other intraday or swing trading… Absolutely fine if you can utilise it in that way… However, what is the probability of this kind of tricky way of utilisation? Do the common traders usually trade in this way? Who are going for option trading with say Rs 5.1 lac, are they ready for intraday trading or swing trading of amount 8.61 lac? No way at all!.. Maximum probability here is your money will remain idle in trading account with zero yield… Even if you withdraw that much to your bank account there is also no use of it, cause again you have to recharge your trading account within very short period like 4 days if you’re trading weekly option…
So considering all the practical possibilities, my take on the issue is, there is no solution at all being provided so far so that traders can actually reap the margin benefit.
In my opinion, if Zerodha might think over the issue which is escalating day by day they can come out with a solution… Yes they are thinking it seriously and that’s why they are shifting some interested traders to Orbis, may be a sister concern of Zerodha, but ultimately a separate entity. In either way some factors are working here in the mind of the traders that Zerodha should understand.
Firstly, if you at all wish to be migrated to Orbis, there is also some restrictions like you cannot trade except Option(may be future also, but yet not clear). So why a trader will go for such confinement?
Secondly, it is most probably for the traders whose involved capital in option trading not less than 1 crore, I beg your pardon if I’m wrong here. So in no way Orbis is a respite for common fellow traders.
Next, comes an emotional issue… Why Orbis? Why not other full fledged broker? Zerodha administration must understand the emotional bonding of the traders with Zerodha which plays a big role here… I don’t want to leave Zerodha, but at the same time Zerodha can’t provide me any practical solution to my problem. Then What is next choice left for me? Definitely I will search for another full fledged broker that can be dependable and match my requirement… And yes so many subsidised brokers are there with robust technical backend, I don’t want to mention any names for obvious reasons. But, I will have no peace in my mind for bidding adieu to Zerodha.
In conclusion, I must appeal to Zerodha administration to feel the the anguish as well as the emotional bondage of common traders and bring out a solution with applicability for all practical purposes. While you are considering to rollover a new basket order, you can add a feature there so that we can Order sell and buy simultaneously with the margin benefit. In this way every problem will be solved. Only the lame buy order beyond limit cannot be possible to execute through basket order, and in normal order also you will be blocking as usual… So keeping the lame buyers at bay short sellers will be protected and allowed to trade comfortably with actual margin.(Without keeping the extra amount as mentioned earlier as idle).
Hope I could elaborate my points… It is after all you guys to think on it and persist the administration of Zerodha to come out with practical solution.
Thanks for giving your time and patience.
Regards.
What has got zerodha to do with it? It’s again idiot SEBI who has put restrictions on OI per broker.
While zerodha & @nithin has been most forthcoming and client friendly guys out there, they have never revealed what they are doing to address this issue. Identifying the issues and resolving them asap is very imp for any business. Hell, one need to preempt the future troubles and make provisions for the same.
We have been facing this OI issue since months now. While nithin was first to inform us about Margining changes and the change in trading style that will bring in - “new breed of traders”
So even though we knew beforehand that issue is going to get worse, zerodha failed to come up with any solution whatsoever.
Laymen like me can instantly think of solutions like buying some other brokerage firm, opening second sister firm of zerodha etc etc.
I just hope like always @nithin come out openly on what the efforts they are taking to address this issue. Or its only us in false hope waiting day in day out.
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Yes your point is true… There’s OI restrictions for every broker…
But think, while Zerodha is not stopping you to buy beyond limit if you have short position open, that means Zerodha still have that number in their quota unfilled. They are only restricting lame buying to facilitate sellers.
Then, in this point OI restriction is no more an issue… Only need some backend technical changes to introduce new feature in basket order so that the traders can order simultaneously with margin benefit… From December, Leverage is going to enter in history leaving behind margin benefit as a last resort of option traders. So due to OI restrictions if it is hindering the traders’ interest then the authority should think sincerely on how it could be implemented for the sake of the quite good numbers of clients…
Unfortunately any client even with 10k amount can buy lots of options priced at 20 paise etc, eating up the OI limit easily. And yes they cannot just stop the trading for a month once a OI limit is filled up within 2-3 days of new cycle. So slowly releasing OI is only option left.
Also ppl buying deep otm for sake of lottery are doing no good to themselves either. For buyers best bet is ATM or near OTM. And Zerodha is allowing that. Only issue is for genuine traders who want to buy for hedging or as per the strategy. For eg I want to sell Monthly buy hedge it with weekly. And I dunno if they allow this.
That’s my point, and here is my emotional bonding. User friendly CEO is a rare instance. I’m emotionally bound here… But, with mere emotion my purpose shouldn’t be compromised… If my ROI getting drastically low due to lame excuse of OI restrictions, then definitely I will have no option but to go for second one… I have checked with my four fellow traders in different brokers, they are doing well… But my emotion and comfort with Zerodha drags me… Feeling very much helpless…
You can hedge if you have short position irrespective of expiry. You can buy option of any expiry to hedge your short position.
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That you can do… It is there.
You see… Who will buy near to Spot is considered sincere trader with a convinced strategy. However, the problem is with the lame buyers who blocks with merely @ 20 paisa dreaming a bolt from blue in the market so they can earn a huge profit… You might be surprising to know there is a strategy called ‘’ Hero or Zero’’ And some guys are there who breaking the Internet uploading thousands videos on a ton of crazy strategies of very cheap buying… This kind of crazy minded fellows and their followers damaging the healthy atmosphere of trading… Anyway, our so friendly CEO must think the severity of our concerns and hope, one day will come out with a surprising solution… Till then live with hope…
But again the same issue. I wont be able to properly utilize my margins.
Sell, buy, sell, buy will increase my brokerage charges many fold though! 
Only solution is to enable this in basket order atleast.
Plz do comment
Hopefully, you have got my point… Going short first means you have to keep reserved 2.5 times money than actual requirements…
And sell-buy, Sell-buy… n number times not only increase the over all expenses but also you will not be able to take that much amount of trade Say 10 lot nifty with 5.1 lac… And sometimes it is very ridiculous to go for repetition of same action. And sometimes you will miss the opportunity to trade in justified price…