Certain long dated, Deep ITM and Deep OTM options are very illiquid. As a result they have a very high Bid/Ask spread, they may have very low or NIL volumes, very low or NIL Open Interest (OI). 

Regulators have also introduced guidelines to prevent 1) Illiquid options from being used to create artificial profit or loss 2) prevent fat finger errors 3) Prevent orders being placed far away from their intrinsic values. 

To complement the regulatory guidelines and also to safeguard our clients' interest, Illiquid Options and futures are blocked as per Navia’s Risk Management policy. Imagine being stuck with a position in the absence of counter parties to cover the same. For example if we allow to buy an illiquid contract, you would be able to create a position in it by buying or selling the contract. A risk arises when you are unable to square off the position due to non-availability of counter party which is highly common in illiquid contracts. As a result of this, you  would necessarily be required to bring in additional margins, failure of which would attract penalties These penalties will be on the broker for not taking due diligence to prevent trading in illiquid contracts. To avoid these scenarios also we block illiquid contracts.

We have blocked trading in certain options and Futures as per the scenarios listed out below for our Rocket and Rocket Plus platforms.

Based on Expiry:

Based on Open Interest

If any option strike is having an Open interest of ZERO, then such options are automatically blocked for trading. This however, opens up dynamically as and when Open interest gets generated. Hence, if you have trouble in placing order in a particular strike due to 0 Open interest, wait till open interest gets generated in it. Once it is generated, you may place order seamlessly.

Based on Strike

Rocket Trading Platform

Option Selling is blocked for Strikes greater or less than 15% from LTP of the underlying.

Rocket Plus Trading Platform

Based on Volume

Any Contract which has 0 Volume will be blocked in Rocket Plus.

In addition to the above, the following is blocked in Rocket Trading Platform.

Market Orders are Blocked for Fresh Options Positions in Rocket 

Market orders are blocked for all fresh Options positions. This is to prevent orders trading from prices far away from the LTP in case of Illiquid contracts. This however not applicable, when existing positions are  squared off from Positions tab.

Apart from all above, no fresh positions will be allowed to be taken in the Current month Stock Options from 1 day before the expiry date (i.e., from Wednesday if the expiry is on Thursday) in both Rocket and Rocket Plus Trading Platforms.