What is F & O?
It is Future and option, both are derivatives,
while value of derivative is derived based on underlying asset, for stock it is
stock of value, For Nifty and bank nifty value derived from index.
What is MWPL (Market wide position limit) &
how stock goes to ban period?
MWPL is the indicator in analysis of stocks
that trade in the derivative segment. At end of the day total open position is
calculated from NSE and BSE, and based the day data combined open interest of
all option and future contracts for all the months taken together for that
particular underlying crosses 95% of MWPL. Then particular stock goes to ban
period.
What is Open Interest and how it calculated?
Open interest is the total number of open or
outstanding options and/or Future contracts that exist at a given
time.
Example: Open interest calculation
Here, open
interest number only changes when a new buyer and seller enter the market,
creating a new contract, or when a buyer and seller meet and they are both
closing a position. In nutshell, we can conclude the individual open
position remain in market, total volume in option and future is total number of
bought or sold contract, not total of both.
What open interest shows?
It is complex to say every time but logically when
market moves up with increase in open interest favors stock or index to go up.
While increase in open interest shows money coming into future or options
market because of individual participation increasing and vice versa.
Summery of Option open Interest:
Market up with positive correlation of open
interest is bull strength.
Market down with negative correlation of open
interest shows strength.
Market up with negative open interest is
weakness.
Market down with increase in open interest is
continuing weakness.
When stock out of ban period?
Only decrease in positions is allowed until
the MWPL is less than 80% & then the stock is
out of F&O or Futures and Option Ban
.
What is penalty in ban period?
At the end of each day during which the ban on fresh positions is
in force for any security, when any member or client has increased his existing
positions or has created a new position in that security the client/trading
members will be subject to a penalty 1% of the value of increased position
subject to a minimum of Rs.5000 and maximum of Rs.100000. The positions, for
this purpose, will be valued at the underlying close price.
For more info visit….
Can I shift my position from one strike to
another?
It is simple obvious question on everyone mind
whether I can shift my position or not. Will see by taking example of DHFL.
DHFL is trading at 130 Rs.
I am holding 150 strike call and stock goes to
ban period. now on ban date if in morning I square up my position of 150 strike
call, I can buy or sell any strike of call or put even I can do future one lot
also against one lot of option. so, one can shift anywhere freely.
Should I buy or sell when stock goes to ban
period?
Generally, Due to reduction of position
volatility of stock reduce and also option premium also depreciate fast due to
reduction in implied volatility. Example. Recently reliance infra was in ban at
that time implied volatility was 150 At the money strike and
after ban implied volatility reach almost near 100. so, one can make short
position with proper hedge.
what is criteria to decide any stock in ban?
Market
wide position limits, applicable only for stocks (all option and futures
position) and not on index derivatives, is expressed in terms of number of
shares. It is the lower of:
- 30 times average number of shares traded daily, during the previous calendar month, in the cash segment of the exchange, or
- 20% of the number of shares held by non-promoters i.e. 20% of the free float, in terms of number of shares of a company.
Stock Exchanges release the MWPL for each of the stocks traded
in the derivatives segment on a monthly basis
Example, Reliance having free float
shares 3274205906 now, 20% of this is comes 654841181. so,
either 20% of free float shares or average volume of one month multiply by 30
times.
Few
stock one can examine by taking free float shares or 30 times average volume of
shares with MWPL limit. mostly one can check by taking 20% of free float
shares.
UNDERLYING_NAME
|
MWPL (February2019
|
UNDERLYING_NAME
|
MWPL (February2019
|
ACC
|
17078428
|
BIOCON
|
44672997
|
ADANIENT
|
55169320
|
BOSCHLTD
|
1801607
|
ADANIPORTS
|
156144401
|
BPCL
|
199861375
|
ADANIPOWER
|
193065274
|
BRITANNIA
|
23714500
|
AJANTPHARM
|
5196948
|
CADILAHC
|
51610474
|
ALBK
|
50696289
|
CANBK
|
40260000
|
AMARAJABAT
|
16377009
|
CANFINHOME
|
18644752
|
AMBUJACEM
|
144327988
|
CASTROLIND
|
96933993
|
APOLLOHOSP
|
18254499
|
CEATLTD
|
3966064
|
APOLLOTYRE
|
67723169
|
CENTURYTEX
|
11123542
|
ARVIND
|
29429703
|
CESC
|
13275380
|
ASHOKLEY
|
286973403
|
CGPOWER
|
82103824
|
ASIANPAINT
|
90562661
|
CHENNPETRO
|
9742660
|
AUROPHARMA
|
56396335
|
CHOLAFIN
|
14677911
|
AXISBANK
|
380572741
|
CIPLA
|
101917315
|
BAJAJ-AUTO
|
29341807
|
COALINDIA
|
336345332
|
BAJAJFINSV
|
13248060
|
COLPAL
|
26654592
|
BAJFINANCE
|
51558770
|
CONCOR
|
55099499
|
BALKRISIND
|
16124234
|
CUMMINSIND
|
27165463
|
BANKBARODA
|
191844279
|
DABUR
|
113438092
|
BANKINDIA
|
58936059
|
DCBBANK
|
52620094
|
BATAINDIA
|
12092405
|
DHFL
|
38154662
|
BEL
|
185506537
|
DISHTV
|
144254920
|
BEML
|
3828900
|
DIVISLAB
|
25478844
|
BERGEPAINT
|
48578062
|
DLF
|
89416568
|
BHARATFIN
|
27585244
|
DRREDDY
|
24280052
|
BHARATFORG
|
50501678
|
EICHERMOT
|
2763845
|
BHARTIARTL
|
262428715
|
ENGINERSIN
|
60644332
|
BHEL
|
256482590
|
EQUITAS
|
68261466
|
ESCORTS
|
14689242
|
||
UNDERLYING_NAME
|
MWPL (February2019
|
UNDERLYING_NAME
|
MWPL (February2019
|
EXIDEIND
|
91809066
|
INDIANB
|
17549476
|
FEDERALBNK
|
390687191
|
INDIGO
|
19270843
|
GAIL
|
208101824
|
INDUSINDBK
|
89434622
|
GLENMARK
|
30167759
|
INFIBEAM
|
81413204
|
GMRINFRA
|
441771144
|
INFRATEL
|
171832533
|
GODFRYPHLP
|
2891826
|
INFY
|
757551164
|
GODREJCP
|
75135570
|
IOC
|
892327620
|
GODREJIND
|
17009580
|
IRB
|
29847479
|
GRASIM
|
78447148
|
ITC
|
2.445E+09
|
GSFC
|
49535525
|
JETAIRWAYS
|
11132543
|
HAVELLS
|
50509139
|
JINDALSTEL
|
80029268
|
HCLTECH
|
108488721
|
JISLJALEQS
|
63596288
|
HDFC
|
331028275
|
JPASSOCIAT
|
297175650
|
HDFCBANK
|
322340063
|
JSWSTEEL
|
274637182
|
HEROMOTOCO
|
26110651
|
JUBLFOOD
|
14455140
|
HEXAWARE
|
22208479
|
JUSTDIAL
|
8550030
|
HINDALCO
|
292540128
|
KAJARIACER
|
16664813
|
HINDPETRO
|
304764525
|
KOTAKBANK
|
267015629
|
HINDUNILVR
|
142047217
|
KPIT
|
30868887
|
HINDZINC
|
296432938
|
KSCL
|
5669882
|
IBULHSGFIN
|
66523910
|
KTKBANK
|
56521559
|
ICICIBANK
|
967259346
|
L&TFH
|
143962331
|
ICICIPRULI
|
61178818
|
LICHSGFIN
|
60244101
|
IDBI
|
39323831
|
LT
|
275535867
|
IDEA
|
500941313
|
LUPIN
|
47971947
|
IDFC
|
319271663
|
M&M
|
173623634
|
IDFCFIRSTB
|
573782582
|
M&MFIN
|
59712403
|
IFCI
|
147807447
|
MANAPPURAM
|
109330743
|
IGL
|
77000080
|
MARICO
|
103836709
|
INDIACEM
|
44246369
|
MARUTI
|
26458324
|
A stock is put under F&O
Ban or Futures and Option Ban if the market wide
position limit or MWPL exceed 95%. ... Derivative contracts
are not allowed if the stock is under F&O Ban.
Only decrease in positions is allowed until the MWPL is less than 80% &
then the stock is out of F&O or Futures
and Option Ban.
Thanks
Derivativelearn
0 Comments