I tend to deploy my full capital.
So my viewpoint is different.
Shorting a lot require 1 lakh margin and spread require only 25k.
If I have 10 lakh capital I can sell 10 lots naked but 40 spreads.
So instead of directly selling 40 spreads, I am being forced to first sell 9 lots, then buy 9 lots, then again sell and again buy and do this until my full margin is utilized.
If I have 2.5 times capital, I will still do the same sell, buy, repeat to completely deploy full capital.
SO if I have 10 L capital, I DO NOT require 25L capital to enter the trade. But if I have 25 L capital why woulkd I use extra 15 L just as a tool to deploy 10 lakh? I will still use B,S, Repeat to deploy full 25 L
Might be I’ve confused you… Let me clarify a bit on this how our concerns are same…
First, you are intending to deploy full amount of Rs 10 lac and with that you can trade naked short selling only 10 lots. However, with spread hedging you can manage to trade for 40 lots. So here is nothing to be confused. My concern is same.
Second, you have to utilise margin benefit fully to obtain that 40 lots with your 10 lac capital (which required 36.48 lack for naked selling) Right? Nothing is there to be confused here since my point here is also same.
Next, coming to execution, you have to execute a series of Sell first then buy… which is cumbersome and little disgusting for the repetitive action. You might be agree that… However, you don’t have no choice at this point but to go for this… Nothing to be confused here…
Last but not the least, even after your n number of repetition you can not achieve that target of 40 trade… Why.? Because whenever you will be left with less than 1 lac you cannot take any short position… Around 4 lot you have to compromise here. Clear?
Now in conclusion, I want to say that this sell-buy, sell-buy tricky method will not be comfortable to many traders… So better is to going for a straight forward method that only possible through software application at the end of Zerodha. So my urge to our beloved CEO @nithin ji to sleep on it.
Hope this time no confusion I have left here. Still if you think your viewpoint is different, then I have to rethink where I miss your catch?
Thanks a lot for your kind participation in healthy discussion in this thread.
Next week we will come out with baskets, one can able to do with a single click, instead need to enter multiple times.
I know this is not the effective solution but for time being best possible solution.
@siva lemme repeat the concern here.
Some traders want to sell Iron Condors wider than the allowed range here.
Say beyond All Other Expires - 11050 TO 11650 CE & PE.
Now I can buy 11900 CE only if I have short position.
And to get margin benefit under new regime I have to buy first.
So we cannot buy because we have not sell and we cannot sell as we have not bought.
We need solution to this issue.
By this do you mean that, in basket we can enter buy,sell, buy,sell multiple times and execute sequence in one go.
Hey, @maddy_Des this OI issue is getting exaggerated because of OI restrictions on institutions (>500 crores) that SEBI has in place. We are hoping that it might be removed this month. Our clients are also moving to use the Orbis route slowly and steadily, which should also help. But yeah, unfortunately, there is nothing else we can do about this.
If more OI is resided with one Broker if anything goes wrong with particular broker like any technical glitch then huge people have to face the problem .
If they keep restrictions like this then OI will diversify through out brokers and any glitch happens with one particular broker then effect will be to limited people.
@nithin sir,
this OI issue is getting exaggerated - but it was there even before. So, OI restrictions on institutions & orbis seem to be pain mgt and not cure.
Few ppl earlier suggested owening, opening or operating second brokerage firm to make available OI 2x. What is your take on this?
Only zerodha is serious about providing solutions to the general retailers, rest all the brokers are useless, that is why people are ready to stop trading rather than shift from zerodha. Nithin sir kuch karo nahi toh ye kaam bhi jayega haath se. Please atleast make the orbus shift process faster, I have applied for more than 4 days but nothing has happened so far sir.
I don’t think upcoming basket order is going to resolve the main issue… As I apprehend reading many other discussions and reply thereupon, that it is going to resolve the issue of buying the OTM in restricted range. However, it is not a big problem even now also. If you have short position open you can buy beyond the allowed range in deep OTM. The notable change will be here that instead of going for separate 2 (like spread) or 4 (like Iron condor) orders you will be able to execute with a single click. Though all the separate legs will be treated as individual order. So you will enjoy here the easiness and comfort.
But what about margin benefit? Still it remains a grey area since nobody from Zerodha is coming forward to clarify this. Everyone is being told that you will get margin benefit. But nobody is confirming that whether it will be possible to execute the basket orders with the margin benefit, or you have to ensure first that you have sufficient money in your trading account not less than the required amount for naked sell option(which is around 2.5 times more than the actual requirement in margin benefit). After execution of complete set your amount of margin benefit will be released… But as discussed earlier, is it not a problem to many traders to be addressed? As the released money will remain idle…
It is very disappointing to note that our CEO feels the issue is being exaggerated. Instead of clearing the bubbles of the fellow traders the team Zerodha feels the issue is not so important. Always they are coming with a bit of information instead of a straight forward clarifications. God knows what is going to happen after revoking of leverages. Let’s see what the basket is actually going to offer and how far it is going to give us some relief.
I don’t think it is good anymore to discuss on the issue, as the team Zerodha is getting frustrated. If we will be more vocal then there is a possibility to bar us from this forum.
Sir, with all respect and humility I would request you to kindly clarify the following…
Since Zerodha is allowing a trader to buy a deep OTM beyond the restricted range if one has any short position open. That simply means the equivalent quantity is still unfilled in Zerodha’s quota. While you are restricting only the buyers (not actually the sellers). So here OI issue doesn’t play a role if any one going to take the both positions. The only problem lies here is the margin benefit. At present we are getting the benefit after execution of buying which is to be executed later not before. So first a trader has to deploy around 2.5 times money to take the short position and after getting executed of buy position around 1.5 times of money will be released from blockage. Is it not one kind of difficulty for the traders, since this residue money remains idle without any yield. So while you are introducing the basket order why don’t you consider to enable the traders to execute the orders availing the margin benefit? In this way all the purposes will be served and issues get resolved. Kindly sleep on it.
I din’t get what is your point here.
We have OI issue so has to restrict strikes, allowing to buy without restriction for already existing sell because to help them to hedge their positions.
Could you please confirm whether it will be possible to execute all the legs in the basket orders availing the margin benefit beforehand? Then only this basket is really going to be a game changer, otherwise it will be of no use for us who are trading with a limited capital and want to utilise the money best possible way. Until unless the beforehand margin benefit availability gets resolved we have no other choice left but to go for a n number of sell-buy sequences. Your basket will remain to us like a pipe dream to the poorer.
Please clarify this…
Regards.
I failed to make you understand my point here, I’m sorry for that.
My only concern here is, if you enable us to execute all the legs (buying +Selling) as per the requirements availing the margin benefit beforehand while using basket order then all the problems will be solved. Otherwise if we have to deploy first a huge amount for naked short selling and getting benefit of margin after execution of buying which we are doing now, then the introduction of basket order will not solve our problems. So kindly consider to enable the traders to execute the trades availing the margin benefits beforehand.
Hope I could clearly convey the predicament of the common traders.
Regards.
Margin benefit you will get upfront using baskets, but to allow to buy all options outside range then first shorts should be there, both are two different cases.