Document

Blocked Options

Modified on: Fri, 5 Aug, 2022 at 2:43 PM

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 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.

ROCKET Trading Platform 

Based on Expiry


Index Futures

3rd month onwards

Index Options

6th month onwards

Index Weekly Options

1st week of next month contract onwards 

Stock Options

3rd month onwards

Stock Futures

3rd month onwards

Commodity Futures

3rd month onwards  

Commodity Options

2nd month onwards  

Currency Options

2nd month onwards  

Currency Weekly Options

3rd weekly contract onwards

 

Based On Volume

If any option or Future contracts in any segment and any expiry record a traded volume of Zero on T day, then such contracts would be blocked for trading on T+1 day.   

  

Apart from this, fresh positions can be taken in Stock Options only in MIS mode on the expiry date of the options contract.

ROCKET PLUS Trading Platform 

Based on Expiry

Nifty Index Options – 7th month onwards

Index Weekly Options – 1st week of next month contract onwards 

Stock Options – 3rd month onwards

Stock Futures - 3rd month

Commodity Futures – 3rd month onwards  

Commodity Options – 2nd month onwards  

Currency Options – 2nd month onwards  

Currency Weekly Options – 3rd weekly contract onwards 

 

Based On Strike

ITM (In The Money)

Nature of Transaction

Instrument
 
(Equity)

Allowed up to 

Blocked

Buy

Index & Stocks

3% ITM

More than 3% ITM

Sell

Index 

10% ITM

More than 10% ITM

Sell

Stocks

5% ITM

More than 5% ITM

OTM (Out of the Money)

Sell

Index

20% OTM

Beyond 20% OTM

Stocks

15% OTM

Beyond 15% OTM

Buy

Index & Stocks

12% OTM

Beyond 12% OTM

 

Based on Volume

Any Contract which has 0 Volume will be blocked.


Based on Open Interest (OI)

Any Contract which has 0 open interest will be blocked.


Apart from this, fresh positions can be taken in Stock Options only in MIS mode on the expiry date of the options contract.

Did you find it helpful? Yes No

Can you please tell us how we can improve this article?
  Open Account   Open Account   Call   Chat  Whatsapp

Scan To Download Rocket Mobile App

Scan To Download RocketPlus Mobile App

Scan To Download Mutual Fund App

Scan To Download Rocket Mobile App

Scan To Download RocketPlus Mobile App

Mobile Number

+91