Sir, I am talking about far OTM option here! we are not allowed to buy Far OTM option in zerodha before selling OTM options.
That’s why I trade with Astha & Upstox.
Don’t misunderstand. ZERODHA is the best except this OTM issue. I trade in Zerodha for Cash, Future & Commodity.
We are traders/businessmen & so prefer the broker where we get maximum benefits !
@nithin, @siva
Can we please do something on priority for this issue. With peak margin rule , this will be ome a deal break for most option sellers. The Orbis alternative is not a viable option as pledged margin is not allowed.
This is a chicken and egg situation.
- One can’t buy far OTM without shorting a position
- To get the margin benefit to short one first needs to have hedge position.
It is a nightmare right now… If I want to take 10 lots of short straddle with margin benefit, currently I need to
- first short 5 lots (within available capital)
- Take 5 long otm to hedge and reduce margin blocked
- Then take another 5 short
- Again take 5 long otm to hedge it.
This is so inefficient.
Can you atleast remove the restriction on the quantity on the long otm position (step 2 above). Currently you can only take the qty equivalent for the short position. If in the above example I can atleast take 10 lots long in step 2… Step 4 is eliminated.
Please help.
To be frank really we can’t do anything about this now, we do understand from traders perspective but Limits are from SEBI and we need to follow them and no other way out.
@siva
I read here : OTM options buy
that the restrictions are no longer there from last week ? Is it correct? Can we buy MIS OTM options without range limitation?
Yes, on mis. But one can’t convert them to nrml.
Thats perfectly fine ! I was just looking for MIS. You made my day 
So now there is no range restriction on OTM buy ?
1 Like
I already replied the same above. Yes, no restrictions for MIS.
So if I want to use leverage for shorting Nifty futures - can the following be done and will Zerodha allow OTM option beyond the range allowed for NRML
- Short one lot Nifty future - Give full margin of 1.05 Lakhs - NRML Trade
- Buy 1 lot 17100 CE - Will this trade of purchase of 17100 go through ? This reduces margin to 45K
How about purchasing 2 Lots of 17100 - which reduces the margin further by another 50% to 23K - or is there 1:1 mapping to lots allowed
Allowed only 1:1 for OTM options, no restriction to buy any quantity within the limits.
Hi.
i have SOLD NIFTY OCT 19000CE today. for hedging this I have tried to Buy 19300CE same Qty. however Nudge has not allowed to take this trade. i have forcefully closed my 19000CE sell trade. I have tried this 3 times, all the time same error appears.
also, I have tried this with my friend’s account, and to my surprise its working fine for him, he is able to take same trades. please advise of any problem with my account ?
Ticket no. #20211018834702
They consider net-position not individual position. You have bought 19300 CE already.
According to net position principle, you can hedge a position by buying some option only when you have a naked short position. This is the reason I think.
Hi. i didn’t buy 19300CE. Zerodha is not allowing to buy…
Error rejected screenshot is of my Account.
The screenshot which is showing as 19300 is pertaining to my friend, it is allowing for him. but not mine.
Please support. @siva
Dear, Zerodha allows far OTM only for Intraday. Your orders were NRML.
Since your friend has a short positions in 19000 CE, he can buy strikes outside the range for hedged(Upto the short quantity).
I believe you were trying to buy the long 19300 CE directly.
Also under MIS, there are no range restrictions as the position is closed on the same day.
I have tried to take 19000CE Buy only after Selling 19000CE, yet the same error has come, Later I have squared off 19000CE Sell. please refer to screenshots.-
In fact, I have only tried in my friend’s account just to check whether it works or not. to my surprise order went through in his account.
please advice.
You may see 19000CE sold option in black background. that’s my account.
Some brokers allows trading in OTM/Far OTM for delivery (NRML) too !
Zerodha allows OTM/Far OTM for INTRADAY (MIS) only.
For getting advantage of hedging for margin, you have to trade Buy side first (MIS).
While exiting, you have to exit from your Sell side first.
In ZERODHA, all orders should be for INTRADAY (MIS).
Every brokerage firm has a restriction in terms of maximum Open interest (OI) or total positions that can be taken across futures and options of any scrip, across all its customers. This is 15% of the overall market OI. We are the largest retail brokerage firm in India and unfortunately, this has also meant that we have been hitting this OI limit set per broker for Nifty and Banknifty. Due to this, we are forced to restrict trading buying options in certain strikes, mostly out of the money options (OTM).