Option trading is full of confusions while you are learning it. However, in our views there is always something you can learn even if you are an experienced option trader. One major issue normal faces while they are placing orders in Option trading is “Strike Price is Outside the Allowed Range”.
Let’s discuss this issue in detail as it is a main concern for new traders when they are trying to place an order in Option trading.
Table of Contents
Strike Price is Outside the Allowed Range Meaning
It means that you are trying to place an order at a value which is not included in the range offered by exchange at the time. This restriction is only for new long positions in option trading. In Nifty and Bank Nifty options contracts, you can put buy requests only within a specified strike price range.
Example
If the given range for fresh orders is 20700 to 22400 and you are trying to place an order at 22500 then your order will be rejected by the platform which you are using. Same on the other side if you try to place an order below 20700 your order will be rejected.
Rule for allowed Trading Range in nifty and bank nifty
A trading participant’s positions are limited to Rs. 500 crores or 15% of the total market Open Interest (OI), whichever is greater.
Since many customers actively trade and establish positions in index options, the permitted trading range is limited in order to keep OI utilization within authorized limits in most of the online brokerage firms.
Now you can with the error online platforms have started showing you allowed range so you can place an order according to range allowed.
Buy Orders are Blocked for This Strike Price
- Even if the strike price is outside the trading range, you can square-off your current positions.
- You can open new short positions in contracts that are not in the trading range. The limitation only applies to purchasing options.
- If you already have a short position, you can hedge it by purchasing options with no range restrictions.
- If you have an unfilled open order and the trading range is changed to limit orders for that strike price, you will be unable to revise your original order.
However, This range is also important to keep retail investors in mind as SEBI wants to save them from big losses at the end of the day. This is the main reason they direct exchanges to keep a range for new positions in nifty and bank nifty.
Conclusion
The most important thing in range in which you can place the order. However, this makes people unhappy sometimes as they are looking for a different range as they might have a conviction about a price on nifty or bank nifty.
This is all from our side regarding normal buy orders are blocked for this strike price. Although, if you have any doubts about buy orders are blocked for this strike price due to open interest you can just comment below.
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FAQ About strike price is outside the allowed range zerodha
fresh buy orders are not allowed for this strike due to oil restrictions
It means that you are placing an order outside the range specified by the exchange.
zerodha strike price range today
You can check it just by trying to place an order. It is written on the order.
How can open position outside the strike price?
If someone has a short position, he/she can open a position outside the strike price.
Who decides the allowed range in nifty and bank nifty?
Exchanges decided the allowed range in nifty and bank nifty.
Can i square off my position which is outside the trading range?
Yes. You can square off the position even if it is outside the trading range.
