Zerodha : BNF options buying blocking : Explaination required

Hi Siva ,
Thanks for Response.
I was under impression buying/selling both contribute to OI at member level and they are to be added .

NSE rule states : “15% of the total open interest in the market in equity index option contracts”

Yes NSE never stated how OI is calculated , i.e Buying and selling both are considered separately and not combined (I hope Zerodha is right on this).

Kindly add the above explanation to zerodha support portal.

What I am asking is not related to oi level.

Banknifty spot was 29747 and I could not place buy orders on 29900 CE but I could buy 29700 PE.

Similarly, when banknifty spot was 29755, I could buy 29900 CE but not 29700 PE.
Zerodha has some policy to block these orders

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.

Yes, on expiry day it was around 0.5 percentage. Can you increase it a bit higher to 0.7 ?

This allows purchasing of otm options two strikes from spot

That is ATM and nearest otm. I am also missing hero or zero bets due to this limit.

What is this % percentage number ?
Doesn’t zerodha set restriction on 15% OI member level threshold value ?
Is there a new different setting followed ??

Is this restrictive range only for weekly options or for monthly ones too?

For all.

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.

My observations and questions regarding options buying restrictions.

  1. I think this restriction is dynamic, when you are not in 15% OI you
    are allowing to buy.

  2. If one user buy more number of contract other user left out with no contract.

  3. Buying the contract is used for hedging. User will be in loss in naked
    option selling.

  4. why all user are not getting equal level playing field to play.

  5. There is no information available 15% which strike & expiry date is over.
    After placing order and rejecting only user can know.

  6. Is it first come first service?

Can be seen here but as markets are dynamic strikes keep changing a bit during the day. Also strikes may vary little for current and other expiries.

Right, we can’t set limit on particular max quantity allowed. Also there will be no restriction on expiry days.

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.

That is for current expiry, other expiries up to 1000 points away to spot is allowed.

What about other expiry?

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.”

15% restriction is from exchange, we can’t do much about it. Also restriction is not 1%, it will vary from 1 to 10 based on our limits.

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?

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It means on zerodha we cannot deploy iron condors or spread treads, as your limit is exhausted.

yes, i also moved to other broker due to this issue specifically for trading options.

Which broker

Alice BLue and Angelbroking