Hi ,
Zerodha is blocking certain BNF option buying under the condition of OI limits at member level reached. At the same time its allowing selling of BNF options in those strikes .
Extract from above link
“The position limits of Trading members in equity index option contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index option contracts. This limit would be applicable on open positions in all option contracts on a particular underlying index.”
where does the above link says you allow selling but stop buying ?
Does it specify Buying contributes to OI but Selling doesn’t ?
Has ZERODHA set internal limits of 70% of above 15% limit as specified by exchange ?
If yes than why it has not communicated same ? This internal limit is like a BIAS towards option buyers .
Can Nithin or Zerodha Team responsible person honestly reply on this ?
Let me explain how OI is calculated.
OI is calculated by summing all individual level OI at each strike and each expiry for options.
For ex: consider banknifty 30000 strike, it will have call and put at that strike. So, now consider 30000 call current month.
Suppose 30000 call current month has 50k longs and 30k shorts, 50k is cumulative open count of all long positions at zerodha and 30k is cumulative open quantity of all shorts. In this case at that strike level for calls 50k is considered to calculate final OI, only one is taken in to consideration, ie either longs or shorts which ever is higher at that strike, similarly for puts. As zerodha is retail brokerage we have more buyers than sellers at any strike, hence increasing short will never be a problem for us or to other clients, that is the only reason to block buyers for certain strikes and allow sellers across strikes. Hope you got it now.
During last weekly expiry, zerodha did not allow buying contracts greater than 150 points from spot. This is not due to oi limits. I think zerodha has some policy related to strike price
Can you change the limit to 200 ? Because 150 points is about 0.5 percentage of banknifty value. 200 points from spot would be better choice.
We just set some %, this would allow to take positions based on that %. For ex: if we set as 1%, strikes above and below 1% from spot is allowed, as spot is dynamic these strikes are also dynamic, there will be sometimes when 1% will be just below or above from nearby strike.
What is this % percentage number ?
Doesn’t zerodha set restriction on 15% OI member level threshold value ?
Is there a new different setting followed ??
While I understand the limitation that a single broker cannot consume more than 15% OI, is it even legal that Zerodha blocks buying options while allowing to sell the same option contract? Buying options by paying full premium carries limited loss risk for client and zero risk for the broker. Blocking buy trades and allowing sell traders only mean that Zerodha wants people to churn (to earn higher brokerage) and also earn float on the margins. @nithin Please clarify on this aspect. Else we will have to go elsewhere to search for answers.
I have clearly stated above on why we allow sell, also why would we block buying as we can earn more money via allowing that and buying required very limited capital unlike selling and buyers are the ones who does more trading.
To day i am planing to buy BANKNIFTY OCT 31500 CE . It is rejected.
In the margin calculator it is showing ALL STRIKES ARE ALLOWED. I have enclosed screen shot. I want know for all weekly and monthly expiry which range buying is allowed for today.
If is always 1% of the sport price update is not required. But the percentage is changing dynamically then daily update is required.
If any user selling some say some x quantity that user can get at least same number of quantity for buying any strike price below for put selling and above for call selling strike price for hedging should be allowed. If your are
allowing user sell options and 1% restriction will make the user incur heavy loss without hedging. I hope you understand.
your are not answering the question and concern for hedging.
“If any user selling some say some x quantity that user can get at least same number of quantity for buying any strike price below for put selling and above for call selling strike price for hedging should be allowed. If your are
allowing user sell options and 1% restriction will make the user incur heavy loss without hedging. I hope you understand.”
I agree the 15% restriction. At least you can publish the restriction % as table for all bank nifty &
nifty both PE & CE as a table for all expiry. You can also update the table dynamically.
By referring the table user can build the strategy.
Now user can not build the strategy, because they do know their buy order will be executed or rejected because of restriction. Is is correct or not? If it is true what is the solution?
