Friday 21 April 2017

How Any Share of Future & Open will Enter into Ban Period

Dear Reader,

Today i am sharing the basis on which any stock of Future & Option will Enter into Ban Period.

The Key terms are as under:

1. Open Interest: This is the number of open Outstanding Contract in the Market.

2. Market Wide Position Limit: This is applicable only in the case of Stocks and not in the case of Index. Market Wide Position Limit is lower of:
    (A) 30 Times of the Average number of shares Traded daily during Previous Calender Month in  case of Cash segment of the Exchange,
    (B) 20% of the share not held by Promoter group . In other words, 20% of Free Float Share Capital of the Company.

Any Share will go into a Ban when its Derivative contract cross 95% of the Market Wide Position Limit. In other words, when the Open Interest in all the Future & Option Contract exceeds 95% of the Market Wide position Limit.

Once Any scrip will enter into a Ban Period, then no new position is allowed to enter. However, Intraday trades are allowed. If by mistake any new contract was entered, then there is a fine of Rs 5,000.

The Stock will enter into Normal Trading only if overall Open contracts fall below 80% of Market wide position limit.

On Monthly Basis, a stock Exchange release the Market wide position limit.

To get the detail of latest Stock wise Market Wide Position Limit, then please click on the below link.

https://www.nseindia.com/products/content/derivatives/equities/position_limits.htm

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