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 Navia and Rocket Plus Trading 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

Navia Trading Platform : 

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

Rocket Plus Trading Platform : 

Any order placed in a Strike that is beyond the % mentioned in the above tabular column will be blocked. Let's check with an illustration which will be allowed and which will not be allowed

Scenario 1 - Buy Orders - Buying ITM

Whenever you decide to buy, check if the contract is ITM or OTM. If it is In the money, remember you may buy all contracts which are up to 8% ITM as mentioned below. 

Nifty Spot - 22000

8% on Spot is = 22000*8% = 1760

Contracts that are 8% ITM

22000 -1760 = 20240. As 20240 strike is not available, the nearest CE 20250 CE will be taken

22000+1760 = 23760. As 23760 strike is not available, the nearest PE, 23750 PE will be taken

Therefore, Buy orders in all strikes up to 20250 CE and up to 23750 PE will be accepted. Any buy order placed lesser than 20250 CE and higher than 23750 PE will be rejected. The same calculation will be applicable for Stocks as well

Buying OTM

If you decide to buy OTM contracts, you have a wider range to trade. You can buy any contract which is within 15% OTM. Illustration given below will help in better understanding.

Nifty Spot - 22000

15% on Spot is = 22000*15% = 3300

Contracts that are 15% OTM

22000 + 3300 = 25300 CE

22000 -  3300 = 18700 PE

Therefore, Buy orders in all strikes up to 25300 CE and up to 18700 PE will be accepted. Any buy order placed higher than 25300 CE and lesser than 18700 PE will be rejected. The same calculation will be applicable for Stocks as well

Scenario 2 - Sell Orders

Selling ITM Options

When you decide to sell options, check if the contract is ITM. If it is In The Money, remember you may sell all contracts which are up to 10% ITM as mentioned below.

Nifty Spot - 22000

10% on Spot is = 22000*10% = 2200

Contracts that are 10% ITM

22000 -2200 = 19800 CE

22000+2200 = 24200 PE

Therefore, Sell orders in all strikes up to 19800 CE (19850 CE, 19900 CE etc.,) and up to 24200 PE (like 24150 PE, 24100 PE etc.,) will be accepted. Any sell order placed lesser than 19800 CE and above 24200 PE will be rejected.

Selling OTM Options

When you decide to sell an Option that is Out of The Money (OTM), you may sell contracts that are up to 20% OTM, as mentioned below.

Nifty Spot - 22000

20% on Spot is = 22000*20% = 4400

Contracts that are 20% ITM

22000 + 4400 = 26400 CE

22000  - 4400 = 17600 PE

Therefore, Sell orders in all strikes up to 26400 CE (26400 CE, 26350 CE etc.,) and up to 17600 PE (like 17600 PE, 17650 PE etc.,) will be accepted. Any sell order placed above than 26400 CE and below 17600 PE will be rejected.

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 Navia Trading Platform.

Market Orders are Blocked for Fresh Options Positions in Navia 

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 Navia and Rocket Plus Trading Platforms.