Long-dated, deep In-The-Money (ITM), and deep Out-of-The-Money (OTM) options are often highly illiquid, with wide bid/ask spreads, low volumes, and minimal or no open interest. To protect traders from the risks associated with these illiquid contracts, regulators have introduced guidelines to:

• Prevent artificial profit or loss with illiquid options.
• Avoid errors like "fat finger" mistakes.
• Prevent orders from being placed far from intrinsic values.

Navia’s Risk Management Policy:

Navia’s internal risk management policy blocks illiquid options and futures to safeguard clients from being trapped in positions due to a lack of counterparties. Trading illiquid contracts requires additional margins, and failure to meet these can result in penalties.

Trading Restrictions on Navia and Rocket Plus Platforms:

1. Based on Expiry:

   • Index Options: 7th month onwards
   • Stock Options: 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

2. Based on Open Interest:

   • Options with zero open interest are automatically blocked for trading. These options may become available dynamically as open interest is generated. If you encounter a blocked strike due to zero open interest, wait for the open interest to increase before placing your order.

3. Based on Strike Price:

   • Navia Trading Platform: Option selling is blocked for strikes greater than or less than 15% from the Last Traded Price (LTP) of the underlying asset.
   • Rocket Plus Trading Platform: Orders placed in strikes beyond the specified percentage range will be blocked.

4. Examples:

   • Buying ITM Options: You can buy contracts up to 8% ITM.
   • Buying OTM Options: You can buy contracts up to 15% OTM.
   • Selling ITM Options: You can sell contracts up to 10% ITM.
   • Selling OTM Options: You can sell contracts up to 20% OTM.

5. Based on Volume:

   • Any contract with zero volume will be blocked in the Rocket Plus Trading Platform.

Additional Restrictions:

• Market Orders:
  Market orders are blocked for fresh options positions in the Navia Trading Platform, except for Nifty and Bank Nifty options. This measure prevents orders from being executed far from the LTP in illiquid contracts. However, this restriction does not apply when existing positions are squared off from the Positions tab.

• Current Month Stock Options:
  No fresh positions are allowed in current month stock options starting one day before the expiry date (e.g., from Wednesday if the expiry is on Thursday) on both Navia and Rocket Plus Trading Platforms.