Usually People start trading with limited knowledge of technical options. They don't know how to use some option on their trading platform which can protect losses.
The Convert Position option in Zerodha is mainly to convert your trade from Intraday to Delivery and vice versa.
If You bought 20 stocks in Intraday & due to some good or bad reasons want to convert it in Delivery this possible via this feature.
There are no extra charges to convert your position to another trade type.
Here are the some Important Uses
If you go wrong in a trade you can convert the trade of MIS to CNC and save yourself from losses. Whatever will be your losses you can carry forward them if you convert your position to CNC.
If you bought shares in CNC & some bad news came about the stock at the same time. You can convert the CNC to MIS & execute the sell order with no extra cost
If you had bought shares in CNC & stock had given your good return within the same day. You can convert the CNC to MIS and execute the sell order with no extra cost.
If you bought shares in MIS & some good news came about the stock at the same time. You can convert the MIS to CNC and Keep the stock for a long term for further gains.
If you do not convert the order from MIS to CNC before 3:20 p.m., the brokerage will exit your position eventually. You aren't allowed to carry MIS orders the next day.