ZT-Spread Orders
Traders,
Among the multitude of tools available on Zerodha Trader an important one especially for people who run strategies which require placing multiple orders at a time is “Spread Orders”, I’ll explain on why and how to use Spread orders in the following blog.
First thing to know is how to open the Spread Order window and how to monitor your orders as spread orders placed won’t show in your normal order book.
Spread Order window: Ctrl+ Shift + F1
Spread Order report: Window to monitor the orders placed, cancel/modify spread orders, see the picture below.
ZT Spread Orders
Once clicked on Spread Order the following window shows up; do note the 3 different order types in the pic below:
ZT Spread Orders
Will explain taking examples for all the different order types mentiond in the above picture
1. Order Type, SP (Spread):
SP order type is used for taking a calendar spread position. A calendar spread is a contract where you buy/sell a particular month contract (Futures or Options) and sell/buy (take an opposite position) of the same contract of a different month. Why would someone want to do such a trade???
Assume that you see Nifty February futures trading at 5900 and March futures trading at 5960, you feel that this difference of 60 points between both the months is quite a bit and this will reduce to 30 points in the next few days, how do you profit from this idea? The idea is to profit without taking any naked directional risk, i.e., immaterial of the market going up or down, you should be able to profit if this difference between both the futures reduces from 60 to 30 points.
The easiest way to do this is to sell March futures at 5960 and buy February futures at 5900 in 2 different orders and when the difference is lesser than 60 you make profits, and if the difference is more than 60 you make losses. In a position like this there is hardly any market risk and because of this the margin requirement to setup a calendar spread like this as per exchange norms will be very less. Just to give you an example, the margin required for 1 lot of Nifty is around Rs. 28000, so in the above case since you have 2 lots the margin requirement should ideally be Rs. 56000.
But becaue this is a calendar spread the margin requirement for both the positions together due to the reduced risk is only Rs. 6000 and not Rs. 56000. You can check the SPAN Calculator to see this benefit.
The issue with entering a calendar spread in 2 different orders like above is that (a) There is a risk that the price moves between placing both the orders (b) you would have to pay brokerage for 2 orders to enter and 2 to exit (not that we would mind). By using the SP order type in the spread order window, all the above 2 issues get fixed.
*Imp: Do note that while placing the spread order like above you will need margin on one side of the future completely, but as soon as you take the position the margin drops. For eg to take a spread position of buy 1 lot feb nifty and sell 1 lot of March nifty, you will need around 30k to place the order. But as soon as the order is executed, the margin required drops to around Rs6000.
To track the exact difference between 2 calendar future contracts, NSE gives you a specific quote which can also be traded directly. To track this see the picture below:
ZT Spread Orders
Here are the tricky few bits: this difference which is shown on the spread contract can be positive, negative, or zero, which is not possible for all other contracts other than spread contracts. So if October Nifty is at 6200 and November Nifty at 6190, this spread contract in the above figure will be -10.
Here is where I’d ask all traders to exercise caution, as trading the spread differs from trading an underlying. Though you are actually buying the spread you are actually selling the spread contract and hence you can see a red window even though it is a buy order (ideally it should be blue). In the above example, if I put the price as Rs. 20 the spread will get created at the market price and if I put say Rs. 60, it will go as pending as shown below.
Spread order report is under the Orders and Trades menu and the link to the menu is shown on the first pic of this blog.
ZT Spread Orders
So if you think that a spread is going up you will use the buy order window, buy it at 30 and sell it when it reaches 35, or similarly if you think it is coming down you sell at 30 and buy it back when it comes to 25. These spread contracts are not very liquid contracts so exercise caution when setting them up.
When you trade using the Spread Order window the margin benefit is instant. So if you have around 6k in your account you can take a position in 1 lot of the above contract.
2. Order type : 2L/3L
These order types on the Spead Order window can be used for some of these reasons.
Do note that all orders placed using 2L/3L are IOC orders, what this means is that if the quantity that you specify at the rate is not available it gets cancelled immediately. Will explain in detail further…
a. Rolling over position:
You have bought Nifty February Futures and today is the last day of expiry, you intend to rollover the position to the next month, how do you do it?
You will first place a Nifty sell February future and once executed buy the Nifty March future. What is the risk with this?
What if as soon as you sold the Nifty February future, the market bounced and you lost a lot of points before you could buy the March future??
You can use the 2L order type to ensure that this doesn’t happen as shown below…
ZT Spread Orders
b. Pair Trading:
In this kind of trading you are entering 2 different contracts at a same time with an idea to profit from some correlation between them. For example, you feel that the market will go down but the banking index will hold stronger. Basically, you would have to short Nifty futures and buy Banknifty futures and since both the contract values are around the same, you can sell 1 lot of Nifty and buy 1 lot of Banknifty at the same time using the same 2L order type above.
There are other similar strategies for which the Spread Order is useful. But do note that for both 2L and 3L strategies the validity type is only IOC and hence there is no question of pending orders in the Spread Order Report.
3Lorder type on spread orders is usually used for option strategies that involve taking 3 positions at one time. For example:
Collar: Buy Stock/Future, Buy a Put , Sell a Call
Butterfly: Buy 1 in-the-money (ITM) Call, Sell 2 out-of-the-money (OTM) Calls, Buy 1 deep out of the money Call (long butterfly spread with calls, there are many variations to the butterfly)
For the above strategies and many more such ones, it is important that all 3 positions have to be entered at the same time or else there is a risk that one order gets executed and the other goes pending, if such a thing happens the whole strategy can be flawed.
You can use the 3L order type and place all the three legs of the strategy at one time mentioning the price. The order will get executed only if all the 3 are guaranteed executions based on the price you have mentioned, if not all the 3 orders get cancelled.
Spread Orders are an important tool for people taking multiple positions at a same time, you could use Basket Orders for the same where we let you place orders from an excel sheet.
With a basket order you can place as many orders at one time as you want, whereas the maximum number of orders on a spread order window is only three.
Advantage of spread orders (2L/3L) is that they are executed only if all the legs are guaranteed executions, which is not available for basket orders.
Happy Trading,
Zerodha
Your friendly neighborhood discount brokerage
What will be margin for the 2L type spread order in the above example?
Margin benefit you get only when both the legs of the order is executed, how much margin benefit- do check the [SPAN calculator](http://www.zerodha.com/z-connect/blog/view/span-calculator)..
As I mentioned to your other query, usually spread order will be used when you are putting a strategy which you intend to take only if all the legs of your strategy are guaranteed execution…
Sir today nifty trading at 5900, if i sell one lot 5800 CE @ 160 and buy one lot 6400 CE @ 10 what will be the total margin requirement for this trade can i excute this order in 2L or spread order.
Thank You
Margin required will be around 26k, not much of a margin benefit because the calls you are buying are deep out of the money ones. If you buy around the market the margin benefit goes up.
Use [SPAN calculator](http://www.zerodha.com/z-connect/blog/view/span-calculator) to know your exact margin requirements.
Yes you can use the 2L order to enter this position, but note that 2L is an IOC order, so if price/quantity doesn’t match, it will get cancelled..
So spread order is only for future ? not for option.
here i’m talking about z5 version.
Select the order type as 2L and you’ll be able to place spread orders for options on Z5.
so can i exit from order by limit order ? or exit order is also market order only.
You can exit from Admin position. You can place a limit order for this.
Thanks for replying…..
but today i asked query to [email protected]
they told me that “You can not place/exit order from Z5 platform for spread/2L order. you have to use zerodha software.”
i can’t use your software because i’m working in private organisation, so i can’t install it on my computer.
so what is other options for me ?
You can do it from Z5. You can’t do it on Kite is what was indicated by the support team over the ticket.
Hi,
I needed o use spread orders but I had two questions:
1. Can I use spread orders to buy call and put options of different strike price but of the same calender month? I did notice that it is possible to choose the above pair via the spread order window, but was not sure If NSE/Zerodha allows it or not? could you confirm please?
2. I would like to use spread order via the web-interface, Is it possible?
Regards
Arshdeep
Arshdeep,
It is allowed, you can use the 2L option to place these orders. But do understand that all orders are IOC, so if your quantity and price of both legs is not matched, the order will get rejected.
You can also check out basket orders if you wish to place multiple orders with more flexibility.
Hi sir.
I am Ranganathan. Tndr0592
I am a nifty options writer with two or three days positional
Basis. Means
I will sell nifty call and put
Same time. The premium amount will be near about same.
My query is, which order method (2L,3L or any other)
Is best for above trading method.
My querie’s main reason is
I want margin leverages and
How much leverage I can get?
Use the SPAN calculator to see the margin. https://zerodha.com/margin-calculator/SPAN/
I’d suggest you to just use normal order type to get into a trade like this, not spread orders. Just normal orders placed twice.
hw cud we place spread order nd hw it will be taking margin for d order. and is it available on stock futures???
Yes, it’s definitely available for stock futures. And the article answers the rest of your question. 🙂
u said dat, we get details from d span calculator, but did,nt seen any option for spread margin calculation.
😀
Hi Joesph,
You will have to enter the entire portfolio on the SPAN calculator and then click on Calculate to know the margin required for the spread. More on how to use the SPAN calculator here: http://www.zerodha.com/z-connect/blog/view/span-calculator
nd one mOre doubt,
can i spread different bank future stocks (like IOB nd Vijaya bank) in 2leg. if i can jus give an example
Oh, yes, most definitely! You can easily trade pairs using the 2L order window.
Can we play a butterly spread order in NSE NOW ? if yes then
Assume if june nifty options current price is
5900 CE is 140
6000 CE iS 100
6100 CE is 60
If i do long butterfly spread i.e 140 – (2 *100) + 60 = 0
What is minimum margin required before and after trade execution ?
Please don’t ask to check the span calculator. You already know i am trading with NOW platform?
Yes you can place the same on NOW. Let me give you a live example,
May 5800 calls are : 138
5900 calls are : 82
6000 calls are : 44
So long butterfly: 138-(164) + 44 = 8
So yes SPAN is not available on NOW, but I have put the above values on SPAN calculator on ZT and this is what it shows:
Total margin required: 34551 for setting the entire spread.
is 138-164+44=18?
Hi
Since this position has maximum lose potential is IRS 900.00 why the margin is so high?
I have use the span calculator for below position
Sell Nifty-30May-5800-Put
Sell Nifty-30May-6400-Call
Total Margin required : 37941
At time of taking this position only above mentioned amount is block as margin. But after T+1 in my Client Cash Credit view total debit is 64530. It is almost double of what it is on span calculator. Please advise on this discrepancy.
Guess there is no issues, margin blocked on the SPAN you can see and margin on BO as you can see is the same..
Hi Zerodha,
I have 2 question
1) i will buy nifty 1 lot may and sell 1 lot june using normal buy sell order.
2) i will place order using spread contract order means buy nifty 1 lot may and sell 1 lot june at one order(spread order).
What is the span and expo margin required in both cases, for intraday and positional…
Hi Kiran,
In both the above case margin required under Span & Expo would be the same. Spread order feature is for your convience & diminishes the risk arising out of price differential due to delay in placing 2 different order under normal buy & sell oder.
For more information on margin requirement use ‘ Span Calculator feature “
Thanks AMOL for replying correctly, had missed answering this question..
Hi Nithin,
I have created ticket 345398 with respect to Spread order. I am not getting convincing answer from support team. Just to brief you up here are issues –
1. While placing Spread Order from Z5, system is asking for margin of 1.8 lakhs for 1 lot which I believe way too much considering only two futures lots of Nifty 75 quantity lot size.
2. Support team informed that I need to maintain margin for 1.04 lakhs which is different from 1.8 lakhs system requirement.
3. As per the above documentation, if Spread order is traded (offered by NSE) then only 6k marging is required. It can be 18k now due to increased lot size.
Can you please clear the air on the spread order please.
Thanks,
Himanshu
Hi
Is it possible to put a spread order between spot & futures under the ” Spread Order ” option ??
Regards,
Amol
You cannot place a spread order between spot and futures.
hi… this been a very interesting concept..
IOC means Immediate or cancel right? so have a question that,
once we entered in to 3L trade & all three prices are not triggered (only market order can do that as every tick is changing) will it get canceled right there or will it be open till the all conditions are met and get cancelled at the close if all price is not alined according to order?
the later is better as some arbitrage strategies can be placed with ease and good executing accuracy.
please guide.
shaggy
Shaggy,
IOC is immediate or cancel, so basically if all the 3 prices are not matched in a 3L, the order gets cancelled immediately.
We cannot really put a limit order for 3L can we? What if only one gets executed and remaining 2 remains pending?? It won’t really be an arbitrage, it will be naked then…
If I resort to Pair Trading and buy one option and sell another option. Would I be left with a long position in one and short in another? Would I have to square off each one of them?
Yes Mohan, you will be left with long in one and short in the other. You can either use the spread order again to exit both together or you can exit individually.
Cheers,
Is it possible to enter simple call or put spread orders? Like for eg: If I buy a single lot higher strike call and sell a single lot lower strike call, my max loss will be only Rs. 100×50=5000. So can I take such a position with only Rs.5000 margin?
You won’t get a margin benefit because you are taking such a position through spread order. To see the margin benefits for positions like those check the SPAN calculator
spread failed to take into current position during rollover. It is useless. Kindly see that is rectified and then pass on the info to all clients.
Yes Mr Gandhi, we are working to fix the RMS rule for 2L orders where you are trying to rollover the position. Will update as soon as it is fixed.
Cheers,
Hi
Can I place spread order in options. Example.Can I buy bhel 135 put at rs.6 and buy bhel 145 long at 7. What would be the span margin required. I tried to calculate but i couldt find it out. please help with this.
Also I would like to know whether i can sell an option contract and hold it till expiry… Example ranbaxy 350 put is trading at 4.25… can I sell today and hold it till expiry…
Lalith,
To know how ot use the Span calculator, read this blog.
Coming back to your query, when you buy options there is no SPAN margin, you need to bring in the entire value of the option. So when you buy BHEL 135 put at Rs 6 and 145 Call at 7, you need 2000 x 6= 12000 for buying puts and 2000 x 7= 14000 to buy calls.
Span margin comes into play when you write them(sell them). Yes if you write 135 puts and 145 calls together you will get some margin benefit and SPAN calculator will tell you how much exactly.
To write/sell 350 puts on ranbaxy and hold it till expiry, you will need around Rs 30,000.
Cheers,
Zerodha,
How to close Spread order (2L /3L) in one go.
Presently, I close each position separately.
You can take opposite position with the same spread order window.
Thanks for response,
There is no direct method to close the spread order ?
Filling all the parameter for reverse order is not only tedious but makes room for wrong entries.
Get your point, but presently there is no direct method.
Zerodha,
CE 5800 BUY 353
CE 5900 SELL 269
Margin required for the spread order is 29000 approx. after execution.
i) When actual order is placed it ask for something like 99000 approx. as a spread order. (Margin for short + cost of Buy)
ii) When two order are placed separately Short with margin about 64000 and buy with 35000 ( sell premium + additional 8000)approx total margin required approx 72000.
I dont find any benifit in spread order to start with expcept for saving 20/ on brokerage or sometime you may refer to a sudden sharp change in underlying. Or we don’t get the margin benifit in the second case and all the 72000 approx is required.
In any case loss is limited. Am i missing some thing. ?
Would not it be prudent that for spread orders, you should allow orders to be placed with reduced margins instead of enhanced requirement ?
NB: Above calculation are for 2 lots each.
Please ignore that there is no juice left in the spread.
Rainmaker,
Yes the margin benefit you get only once the order gets executed and not while placing, this unfortunately is an exchange requirement.
Hi Zerodha,
Why is SPAN MARGIN for a simple OTM Call Spread too much? The maximum liability is only the difference between the strike prices but the MARGIN calculated by SPAN CALCULATOR shows as if the MARGIN is for selling naked calls.
Say, today Nifty is at 6153 with 11 trading days to expiry (31Oct). And I am trying to setup a bear call spread:
1) sell: 6400CE, 100 = 640000 (underlying)
2) buy: 6450CE, 100 = 645000 (underlying)
total: (5000) (net underlying for the spread)
But instead of showing Rs. 5000 as margin, it shows me Rs. 37599/- as margin. Maximum Profit potential on this spread is Rs. 800. To block nearly Rs. 38000 for a reward of just Rs. 800 seems to be a sheer stupidity.
If spreads are not safe, then what is?
Does our NSE exchange stipulate such arcane span requirement for the spreads?
SPAN requirements in India for option spreads are pretty high, but they do give a slight margin benefit.
For example in this case, margin required for writing naked 6400 calls is around 39000 for 2 lots, whereas with the spread you can do so with 37600, a margin benefit of around 1400+premium required to buy 6450.
Guess what NSE looks at it is, if you exit the long options the short will remain naked and carry a risk. Since we can’t trade the spread itself and have to take 2 positions to set a spread, there will be an execution risk trading this.
i guess in US market what they do is the buy position will be allowed to be closed only if there is sufficient margin for the open sell
i think u brokers must take it up with the exchange and make changes, if effect the traders ROI significantly
Calendar spreads are the only thing that you can presently trade directly from the marketwatch.
Also, for selling 1 lot of futures (overnight), SPAN CALCULATOR shows a margin of 48731, whereas the daily span files on the backend show the overnight margin as 24500.
Which one is true? Is SPAN CALCULATOR updated regularly?
I think you are checking out for 2lots(100) on SPAN, For 1 lot it is around 24500 and shows the same correctly at my end.
Hello,
thank you for web span calulator,
my query is
Axis bank sell 28-nov future
buy 28-dec future
margin showing is 8000+, if nov future expires below my sell price how much will be my profit?
Can I use SP/2L/3L order type to save on brokerage/commissions? Meaning all the 2 or 3 legs of the order are from different scripts? is there any requirement that script must be same or somehow related for different legs of the order?
Shailesh,
Even though you send multiple orders using Spread order, it will still be separate orders sent to the exchange, and hence there would not really be any brokerage benefit.
Does not following quote from your article suggest otherwise?
Quote
“The issue with entering a calendar spread in 2 different orders like above is that (a) There is a risk that the price moves between placing both the orders (b) you would have to pay brokerage for 2 orders to enter and 2 to exit (not that we would mind). By using the SP order type in the spread order window, all the above 2 issues get fixed.”
I have used 2L/3L orders for option trading. Only rs: 20/- was charged for all the three legs of the order. My question and concern was that last time it did not allow me to use combination of banknifty *AND* nifty options in the same order. it gave me error like :
28Nov2013,10:02:34 — NFO ORDER: 3L ReportType:reject Status:rejected Rejection Reason: 16416 : Invalid combination of MF/AON/Disclosed Volume NESTOrderNo:131128000009876 IOC for ****** by ****** ExchangeOrderNo: 2013112826325881 FIRST LEG OF 3L ORDER : BUY Total QTY:25 Open QTY:25 Filled QTY:0 of BANKNIFTY13NOV10400PE at 0.00 ExchangeOrderNo: 2013112826325881 SECOND LEG OF 3L ORDER : BUY Total QTY:50 Open QTY:50 Filled QTY:0 of NIFTY13NOV6050PE at 0.00 ExchangeOrderNo: 2013112826325881 THIRD LEG OF 3L ORDER : SELL Total QTY:50 Open QTY:50 Filled QTY:0 of NIFTY13NOV6150PE at 0.00
For security reasons, I have replaced my user ID with ****
Invalid combination of MF/AON/Disclosed Volume ……..
so where do I specify Minimum Fill (MF), All or None (AON) or disclosed quantity during 2L/3L order entry? or what is default values for this attributes in 2L/3L order orders in Zerodha traders software?
and again, my original question: is there any requirement that script must be same or somehow related for different legs of the order?
I am following up through emails with your help-desk / customer service but I, am afraid, am not getting convincing and satisfactory answers.. 🙁
thanks
shailesh.
Dear Shailesh,
Im stuck at the same place. Are you able to get the brokerage benefits while placing spread orders ? Kindly enlighten
HI Nithin
1- If in place of Spread if i take a buy and then sell separately will i get the margin benefit.
2- Also suppose i take then orders 1st in mis and then can i convert the same into NRML to carryforward
1.Yes you will get the margin benefit, if you buy and then sell it separately, but only once both the positions are taken.
2. Yes you can take it as MIS, and convert to NRML and carryforward.
Cheers,
thanks this will be of great help
1. How to convert MIS into NRML?
2. How much margin required while square off the position in this case. ( tell me the techniqe using lower margin MIS to NRML)
1. Check this https://kite.trade/docs/kite/#positions
2. To square off a position no margin is required. You need only while entering. If you have a position in NRML, you can convert it into MIS and this will reduce margin requirement by 60%, but this is only valid for intraday. Check this post.
Thank u for quick reply.
I have another query.
Suppose i have 50k in my trading acount. Today i taken one lot of nifty calender spread in MIS. now i want it to convert into CNC and continue. My question here is how much minimum balance i should have? 50k is enough? How to calculate margin?
You can calculate it here. Yes 50k is enough more than enough for calendar spread.
what about trading commodities? Lead mini March and zinc mini april ?
hiii nitin sir i have a query about calendar spread order in commodities ie buy zinc 1 lot of current expiry and sell one one lot zinc of next expiry how should i place an order
Ravi, you will need to place 2 different orders, buy for 1 month and then sell the next month or vice versa.
nitin sir thanks for reply but i have a confusion. in your nest platform you have given the option of sp trade what is the use of that.
2 if we place 2l order for calendar spread in zincmini placing rate000 i.e. market order can we do that
3. if we place sp order by placing diference in 2 contracts of zinc mini coontracts will it executed
Yes Ravi, you can either place 2 orders separately or use the 2L option in the spread order window as explained in this post above.
2. Yes you can place the rate as 0, and it will be considered as market order.
3. Calendar spreads for futures trades on NSE, but it doesn’t trade on MCX, so you can’t really place SP order by placing the difference.
To place a spread order for 2 lots nifty. the margin requirment after benefit is 14000. If we have this credit in the account is it possible to place a spead order for 2 lots or is the entire margin of about 60k required.
Hari, if you are talking about Calendar spreads, you can directly buy/sell calendar spreads. Use the drop down on the top where you choose to add security to the marketwatch, choose spread instead of Normal, you will get an option to trade this spread directly. If you are doing it this way only 14k will be enough. But if you are manually placing buy for 2 lots of 1 month, and then sell for 2 lots of 2nd month, you will need the 60k.
Nithin sir,
i want to use spread order but i have some question
1. if current nifty is 6700, if i sell 6700 call @ 150, margin around 30000/-, and i sell 6700 put @ 130, margin around 26000/-, i have to pay 56000/- for both position, in spread order…………i.e.
6700 call sell @ 150 &
6700 put sell @ 130
que.1 i can put order for above two position in spread order same time?
que.2 both execute same time?
que.3 how much margin i have to pay for spread order ?
que. 4 margin benefit i get after execute order or initial margin amount is high and after execute i get benefit in margin?
que.5 i have to squre off both position same time or i have squre off one side and i can hold my second position, if yes than how much margin require for second postion which is not squre off by me?
que.6 i can hold both position for overnight or only for intraday?
que.7 if i want to take these type of position spread order can give me any margin benifits?
sir, please give me ans., thanking you
1. Yes you can
2. Spread order has an option of IOC(immediate or cancel), so it will get executed only if both the price is available otherwise both the orders get cancelled.
3. Margin depends on the position, in your example you will need 56000 to place both the orders.
4. Yes Margin benefit only once both the positions are taken.
5. You can square off one and hold onto your second position. For the second position you will require whatever is the individual margin ( either 30k or 26k, in your example)
6. If you are placing orders using product type as NRML you can hold for overnight, with MIS only for intraday .
7. Spread orders gives you a convenience of placing multiple orders at same time, margin benefit you get based on if the positions you take are hedging each other, that you will get irrespective of if you placing order using spread or directly.
Hi Nithin,
I have following question:
Assume I have written 1 lot of Nifty CE 7100. This is my current position.
Scenario 1:
Can I cover current position and simultaneously write 1 lot of Nifty CE 7200 at market price?
Scenario 2:
Can I cover current position and simultaneously write 1 lot of Nifty PE 7100 at market price?
I am asking these questions because I was not able to execute the above orders the other day. The submission of order was not successful because I was getting the message to select contracts with different expiry date. But I want to execute the above orders in same series.
Shashi, if you already have a position, you cannot use a Spread Order to exit one and enter another one at the same time.
Use the 2L or 3L order to place such an order. While you’re using 2L or 3L from the spread order window, make sure you place market orders. To place a market order on the spread order window, you need to place a higher price for buy and lower price for sell.
hi if i place one pe sell and one ca sell of nifty option will i get the margin benefit like 7500 call and 7000 pe
yes you do and we were the first brokerage in India to put up a SPAN calculator that lets you find this out. Check this link on how to use it.
Is it possible to add a feature so that the order will be placed as long as the difference or ratio is the same so that the exact price of a contract doesnt matter. eg: we could say x for current month futures and x+50 for next months.
hmm.. Not really possible as of now.
Assuming NIFTY JUNE FUT LTP is 7557.00 and NIFTY JULY FUT LTP is 7591.00 and I put a Spread Order the way you explained in the article to sell at limit:
Buy – 1 lot – NIFTY14JUNFUT – 7555.00
Sell – 1 lot – NIFTY14JULFUT – 7593.00
1. How will the order execute? As you can see I need slightly more difference than what is being traded. Will it get cancelled immediately or wait for the day till these values have reached and if not get cancelled at 3.30 pm? Note that this is a SP order, not 2L.
2. Also I see that it DOES NOT allow to feed in the second order. Which means it allows to fill the Buy 1 lot NIFTY14JUNFUT 7555.00, but does NOT give space to fill the values for the Sell 1 lot NIFTY14JULFUT.
So should we consider that as soon as the buy order is filled, the sell order is executed at MARKET?
Please explain.
1. Yes spread orders are IOC, so if both are not filled immediately it gets cancelled.
2. Yes
If you are looking at trading calendar spread, you can directly trade them by adding the spread contract on the marketwatch.
Thanks Nithin. Just two more confusion.
1. Taking your example of OCT-NOV future trading at 42. If I put limit at 40 – you mean to say the trade will occur at market at whatever rate above 40. So the contract I get is this: Bought 1 lot OCT future rate:**** and Sell 1 lot NOV future rate:**** with two trades
OR
will I get a contract of a single trade – “Buy OCT Fut, Sell NOV Fut at 42.”
2. And out of curiosity. If this trade occurs will NSE actually buy 1 lot OCT FUT and Sell 1 lot NOV fut for me, or just sell this as a single trade to someone willing to buy this trade at 42. This one is very critical as I do not see much liquidity here. In that case a market order means I may sell it at 40 or even less.
Dilip, Calendar spreads are contracts in itself that trades on the exchange, if you are buying it at 40 with the view that it will go higher, the one selling will have a view that it is going lower.
dear nitin sir , I have some different query. I want to know what is the technique to pace bulk order in nifty options. for example a nifty call is trading @ 200 and one has to place a buy order of 2,00,000 qt. how should he place it, as we see at a time only 100 – 500 avg quantity being traded.so what should be the right technique to buy the desired qt at the best market rate prevailing . kindly reply .
The only way is to put small orders at one time, and wait for it to get executed before you place more.
hi nitin,
Is there any way so I can personalize my default setting in spread order.
like order type = 2L,Product type =MIS etc.
hi Nithin Kamath.
In Spread Order Book, is it possible to place spread orders for “Sell Call 8000 @Rs… & Buy Call 8100 @Rs…”.
Satheeskumar
No Satheesh, it is typically used for calendar spreads. Buy one month and sell next month or vice versa.
At this time, Oct Call 8000 is trading at Rs.79.90 with Vol 74921. Whereas, Nov Call 8000 is trading at Rs.152.00 with Vol 1126 only. Means, liquidity for Nov Call is very tough. In that case how Spread strategy will work ?
Check this to understand how calendar spread works on options. Unless you are trading really big volumes, liquidity especially when trading NIfty options wouldn’t really matter.
Hi nitin,
For a perticular day I prefer to trade in option pairs say 8000 PE & 7800 CE.
Every time I have a long trigger I buy 7800 CE & sell my open 8000 PE with a single spread order.
Every time I have a short trigger I buy 8000 PE & sell my open 7800 CE with a single spread order.
While doing this I observed that the default settings for Spread order are not so user friendly & I do make lot of mistakes (like Selecting CE instead of PE or product types NRML instead of MIS etc.)
So, is there any way by which I can personalize my default setting in spread order.
like order type = 2L,Product type =MIS etc.
first order = BUY CE 7800 price 0.
second order = SELL PE 8000 price 0.
I think a basket order is a better option for this. Check this. You can have the orders saved in an excel, modify it if required and upload it to place an order.
HI Nithin
Recently I DID A Spread Trade In TATA steel when i Bought the Same @ 3.15 on 10th oct And sold the same on expiry 30/10
@ 2.50 , IS that Trade Profitable ? if yes How to Calculate the Profit the Amount or the Loss at a lot size of 1000
Also it will be of Great Help if you Can suggest me Some Good Site Like option express or investopedia for Hedging a Humble Request to You .
If you bought at 3.15 and sold at 2.50, that would definitely mean a loss. You have to just login to https://q.zerodha.com/ and check your P&L
All this Days i was Thinking That i am in Profit but please explain here when we do hedging or the spread its the difference through which we gain profit When the difference is 3.15 ans when i again squared of the same at 2.50 the difference has reduced and i should be in profit ideally also please explain how we i should have made profit in the trade
It depends on if you have bought the spread or shorted it. Can you explain me the exact trade you took?
My ID is TNDN0569 so That You can access the account also The trade which Took was Buy TATA Steel Oct Fut ANd selling the Novem FUT when the difference was 3.15 in the Spread contract and Squaring the Same Off when the difference was 2.50 on the Expiry Day .
IF say tata steel Oct was at 400 and Nov at 403.15, you bought Oct and short Nov. Say on expiry if you sold Oct at 410 and bought back Nov at 412.5, yes this would have been a profitable trade. But if your Oct was short and Nov was buy, then you would have lost on this.
Dear sir,
If i want to buy a Tata motors 580 put and short 520 put, is it possible to place this order in Spread order 2L to get margin benefit or i had to place it in normal order?
Best you place normal order, you anyways will not get any margin benefit even if you use the 2L order. The margin benefit is given by exchange only after you take both the positions.
Hi
Please note that I am doing PAIR Trading nowadays.
I just want to know whether is there any possible to enter the pair trading using spread order.
for I sold Indusindbank current (JAN) contract and bought ICICIBank current (JAN) contract by normal individual order. is there anyway to enter.
You could use the basket orders for this.
Thanks for the reply. I just want to know if i enter any basket order in market price and if i want to exit the position when in profit how can i exit? by the way of Squareoff (if any) or need to place same order like Basket type?
You can either square off normally, or use basket orders. There is no restriction.
I tried to place a spread order “2L” of the same scrip of the same expiry with different strike price. I am getting an error
“The expiry date for the second leg should be greater than the first leg”
Cant we place this order??
Rahul, you will not be able to use Spread orders for that. You can use Basket orders, check this.
Thanks Nitin for quick response. But in the blog it says that we can place these type of orders. If you just look at the explanation given in pair trading it seems that it should have been possible.
As far as basket orders is concerned, It will not execute both the orders together I guess. I wanted to use the feature where both the orders will be executed or cancelled immediately.
Rahul, there are some issues on the 2L/3L, and our technology vendor Omnesys/Reuters is working on fixing it.
Hi Nithin,
Can you please tell breakeven points (including brokerage) for banknifty future spread of Jan 2015 and feb 2015. Thanks.
You could do this yourself using our brokerage calculator.
Hi Air….
Taking your example of OCT-NOV future trading at 42. If I buy/ sell spread contract , then would it be like Bought/ sell 1 lot OCT future rate:**** and Sell/ bought 1 lot NOV future rate:**** with two trades
OR
will I get a contract of a single trade – “Buy OCT Fut, Sell NOV Fut at 42.”
2. And out of curiosity. If I put a spread buy order at say 42 then would it trade with someone who is willing to sell it at 42 or it may trade off with individual contract legs?? This is important, please reply.
Thanks and Regards
1. You will get two trades on the contract note.
2. If you place an order at 42, it will get executed only if someone sells it at 42. It won’t randomly execute individual legs.
Does your software have spread functionality of Ncdex??? In Ncdex tradex software (exchange’s own software) when we put a spread order it trades off not with someone willing to sell at 42 but will individual legs…
We are still not live on NCDEX Atul.
Few questions about With Futures Calender spreads ( Future to Future not Option to option)
1) how do I calculate the cost associated with in terms of tax+ brokerage etc Can you please give a worked example? I mean is it worth trading at all?
2) You mentioned some time the single click spread trading has low volume ( but no risk of being hung on one leg) so is then doing 2 legs sperately better from point view of volume ( with legging risk)
3) Can such a spread be charted? ( Bid Ask not LTP)
4) Would it be correct to assume the single click spread trading would be available on any futures stock/ index( given both legs are on same instrument)
5) Are NRIs allowed to trade F& O?
1. Mk, my bad, I will change what I wrote earlier. The contract note will show it as two separate trades, buying Jan fut, selling Feb fut. So all your charges will be as if you had placed two separate trades.
2. The thing with single click spread trading is, it is an IOC order and hence if the spread is not available it gets cancelled. I think it is better to place the 2 legs separately.
3. It can be, but there is no one offering historical charts for Spreads. On our new trading platform Pi, we are trying to do this.
4. Yes
5. Yes, but it is slightly more complex and expensive. NRI’s will have to first open what is called a custodian account, and then trade using that.
Thanks Nithin
Slightly confused
A) Execution: so is it Exchange recognised std spread with it’s own market depth (like those offered on CME?) or a derived spread with legging risk?
In 2) you mention it is better to do as leg in ,, is that from a filling point of view or cost?
B) I am not familiar with the Indian Futures costs ( in overseas markets it is normally brokerage + exchange fees that is all)
SO is there any easy way to calculate the various costs for the Spread trade ( round Turn?)
It is important in a spread trade like this because unless the % of cost is reasonable with respect to possible reward it may not be worth it!
Hence the question about historical price movement (chart) of a spread!
For example NIFTY calender spread ( I am guessing most liquid!)
Also is co location important for this?
and last question
Why is it expensive or NRi? are various taxes higher? same instrument are we penalized by the govt for bringing money in!
A) It is a derived spread, but there is no real legging risk as the orders allowed are all IOC(immediate or cancel). So for example you place an order to buy 10 lots of Jan/Feb Nifty spread at Rs 50, only if it is available at 50 it gets executed, otherwise the order gets cancelled. So yeah that could mean an opportunity cost, so yeah it is more from a filling point of view. Cost remains the same, if you execute through the spread order window, or individually.
B) Have you checked our brokerage calculator(http://zerodha.com/brokerage_calculator). So basically the costs are Brokerage, Exchange and govt charges. Let me give you an example, say 20 lots of Nifty (500 Nifty) you put up a spread. Say you are buying 20 lots of Jan and shorting 20 lots of Feb. You then reverse this. So the round trip is 4 trades. So the brokerage is just Rs 80 ( 20×4) that we charge. All the statutory charges, you can find on the calculator.
Let me see if someone is selling the historical price movement of spread. You could probably put a query with esginal.
Unlike a normal client, we as members of the exchange can’t take the funds directly from an NRI. All your funds has to sit with what is called a custodian. This custodian, charges you over and above thebrokerage that we charge for providing the services (around Rs 300 to Rs 500 per crore). Also, since unlike a normal client we don’t have access to your funds, we have to put an incremental effort to support a custodial client (daily correspondence with the custodian to get your margins and positions, get a confirmation from the custodian everytime a trade happens), hence the brokerage charged is also higher. (We charge Rs 200 per executed order).
The taxes remain the same.
so brokerage would be 10 times… is it INR 200 per Spread one way? round trip?
Would that make it not worth? to do such trading for an NRI!
Mk, yeah if you compare it to a retail client in India it is more, but like I said our effort involved supporting an NRI client is exponentially more.
In India most brokerages charge you a % brokerage, for NRI’s it is usually around 0.05%. So if you buy and sell a spread (which is 4 trades/legs), the total turnover for 10 lots is around 1 crore and hence brokerage is Rs 5000.
With us it will be Rs 200 per trade irrespective of the size of trade (10 lots or 100 lots), so the above trade will cost Rs 800. I guess this is in lines with the brokerage rates offered by discount brokers in the US (between $5 to $10 per trade)
Sorry to keep adding the questions but it is difficult to get straight forward info on Indian market trading costs
I guess what I am trying to calculate is (with this extra brokerage of INR800 per spread round trip + all the govt fees) what point move is required ( NIFTY spread) to make it worth while
Then I need to calculate no of spread contracts (because of you capped brokerage the break even might be better)
SO a exact worked example will be of great use in understanding
For example if say I am doing similar calender spread with S&P 500 E mini futures
For 1 spread RT ( 1 futures each)
Brokerage = say 0.7 $ x 4 = 2.80
Exchange fees $1.16x 4 = 4.64
Total = $7.44
1 tick movement in spread = $ 2.50
SO I need at least 5 ticks movement ( tick calculated of the spread not the individual contract)
Ah yeah, if you are trading say 40 lots of Nifty at a time, the breakeven will be probably around 3.5 points on the Nifty. The STT or the govt tax itself will be half of this cost. But yeah, probably you should look at starting something in India and trading through that, to keep your trading costs low. Otherwise, it may not make sense to get into such trades.
Hii Nithin
Case I – As discussed before you said that NSE spread contract are contracts in itself and will trigger only if there is a corresponding buyer/ seller in the spread contract.
Case II – However in NCDEX the spread contract triggers if there is a price match with the its corresponding legs, meaning thereby that in ncdex spread contract its not necessary to have actual spread buyer/ seller.
Can you please tell me that what is the situation in the all the other markets like nse-currency, mcx-sx, mcx, bse etc.. I am highly interested in case II type trades
I was nice to see such blog and such quick reply.
Thanks in advance
Atul, only on NSE you have the calendar spreads directly trading on the exchange. In other exchanges, you have to fire two orders separately.
DO people trade Index spreads or Commodity spreads? specially agricultural where there is Old crop / New crop ( I am referring to US crops like wheat soya etc)
If I observe the ES s&P 500 ( most popular and liquid index future in the USA) the calender spread hardly moves so there is no point in trading
In case of India does Index spread ?( NIFTY, Bank NIFTY) move that much?
Also does any of the platform show depth of market? ( either of the spread or individual contract
Another sort of related question:
Why people use the word Arbitrage so easily in India for basic spread trading ( intra or inter market)
Is it not misleading? arbitrage means selling and buying exact same thing on two diff exchanges at the same time “GUARANTEEING” PROFIT.
When i hear people saying we will show you arbitrage trading I wonder!
If you are trading a calender spread it is not guaranteed TO PRODUCE A PROFIT
Has this habit developed because there used to be true arbitrage available between BSE and NSE!
Like India us also has multiple exchanges where same stock is traded but the order is routed to NBBO ( national best bid best offer)
Spread trading is not very popular in India, especially because of higher trading costs (the STT/CTT which is 0.1% makes it nonviable). There is a decent bit of spread trading on agri Commodity by people who understand the crop cycle of the underlying well.
You do get opportunity on Nifty and Bank nifty, but hmm.. don’t think it is worth the effort. Usually the middle/far months are not as liquid as the near month contracts. So most of the times, getting a fill becomes really tough.
There are many words used here which just doesn’t add up, arbitrage being one of them. Indian capital markets are quite young compared to the US, but I am sure we will catch up in the next 5 to 10 years.
NBBO is called smart order routing in India, offered by only a couple of brokers till now. We are looking at offering it by the end of this year.
Hey Nitin, do we have SOR – Smart order routing built in to Zerodha?
If yes, can you provide some more details about it?
thanks,
Sudheer
Not right now, on our list of things to do though.
Brokerage Calculation
Hi Nithin I am trying to calculate brokerage via your website calculator
For example 1 NIfty Futures contract
My question is in Qty column should I put 1? or some other no?
Simple logic makes me think If I am trading 1x NIFTY futures contract , it should be 1! but I hear people talk about something called lot size of 50?
(I understand lot size for a standard Option contract ( like in US = 100 shares = 1 option contract, etc) But with NSE OR BSE Futures contract what this LOT size has to do with anything? Why is it so convoluted!
Why not just call it 1 contract = Contract value x Rs xxx per tick simple
Am I assuming wrong things?
Very confusing
:), yeah you have to put the lot size there. You can see the lot size for various contracts here.
Hello
I wish to execute following order
1) Sell Put 8600 of expiry 26th March
2) Sell Call 9200 of expiry 26th March
I have a few questions
1) What is the best way to enter this trade so that there is no loss in between the two trades. Should I go for 2L trade? Please guide me on how it can be done
2) What is the brokerage and other charges required for this trade? In the brokerage calculator, should I put the premium or should I put Strike+Premium?
Regards
Vivek,
1. You can use the basket order, check this.
2. You should put the premium.
3. You can use our SPAN calculator to check the margin requirement for this.
Hi,
Like to know what kind of support is available for placing conditional orders or algo orders for Multi Leg Options orders.
There is a product called Algonomics from NSEit. Is the product live and if yes, how to activate the same.
Is there any other product available for the same and like to know the charges for the same
Rgds
Deva
Devendran, algo trading is not allowed for retail by the exchanges. WE are not live on algonomics. We were offering Omnesys i3 for execution based algo’s, but have stopped because the product was not very stable.
On our new trading platform Pi, we have built a bridge. So you could connect any analytic software that you already use for this to fire orders. No off the shelf product as of now.
If I have executed a calendar spread, one leg would of current month would be auto squared off, what about the next month contract ? Can I set both the contracts to be squared off at the same time on the near expiry month ?
The next month contract will continue to remain. You can’t really set a time, you will have to place this order yourself to exit both at the same time.
Thanks for your reply.
I still need some clarification.
How do I square off simultaneously both the legs, if I have 10 lots in each leg ?
If I close individually, another leg would be un-hedged. And that would attract heavy margin to be arranged.
Ah yes, you can use the same spread order entry to exit as well.
Hi Nitin
I can clearly see that in NSE the spread order gets executed only if there is a corresponding ad buyer’/seller. The system doesn’t trigger the order even if the individual legs are able to execute spread order. Can you suggest any market where there is volatility and spread is not based on a separate contract rather the spread order get executed if individual legs satisfy the condition.
Best
In that case Atul, you don’t really need a spread order option. You can just place a normal manual order two times.
While placing individual orders there is risk of execution of trades at desired spread prices and also in case of 2 leg order, as it is an IOC order, one will have to punch the order “n” no. of times to get the trade executed….My point is do you any exchange (Currency, commodity, interest rates or shares) where the spread order placed is day order and it gets executed if the individual leg satisfies the order…???
No Atul, spread orders by default are IOC on all exchanges. (Actually it is the same wherever u trade around the world). If you are an algo trader (the way most people trade spreads internationally), the order keeps getting placed n number of times automatically.
Got you. Can you please tell me any broker in India who provides such facility of algo trading in nse??
Atul, the regulators in India don’t allow retail traders to participate in automated/algo trading directly. We at Zerodha also allow algo trading, but provided a few conditions are met. Check this post.
Hi Nitin
Very nice post giving a detail idea of algo trading. Before moving ahead there are few more questions in my mind.
1. There are some approved algorithms of NSE. Can I get a list to see what algorithms NSE till now has permitted?
2. My strategy is to put 2 leg calender spread order automatically “n” no. of times based on near month last trade price. Would such automated trading be permitted by exchange??
Hi Atul
May I ask what calender spread you are talking about?
Futures to Futures?
Option to Option?
On Index or Stock Futures
On Index or Stock Options
I am also interested in such strategy
Hi mj
Thanks for showing the interest in calender spread.
I am talking futures to futures calender spread.
1. Atul, algorithms are approved separately for every broker. So there is no list as such which is common for all brokers.
2. Yes, something like this will be allowed.
Is the spread order not available in pi? Btwn I love pi, great way to be pioneers guys, well done.
Thanks Sarita, yes the spread order window is still not there. But you can directly add the spread order contract on the marketwatch and buy/sell them. Choose spread in the dropdown given for adding scrips.
I am unable to buy/sell spread order on Pi.
I can add the spread order contract on the marketwatch but then there is no option to buy/sell them. The buy/sell gets deactivated as soon as I right click the spread order contract. Can you please confirm how can I trade it in Pi?
You can’t trade on Spread contracts on Pi for now.
Hi,
I am trying to use the spread order facility in ZT for following trade and am not able to do so , could you pl guide as how can this be executed or is there any other facility that I need to use for executing.
BUY. NIFTY JUNE. 8200 pe
SELL. NIFTY JUNE. 8300 pe
I want this to get done simultaneously either on IOC mode or when ever the price difference matches my entered value .
Is this possible.
You can use the 2L spread order for this. There is no way to do this based on price difference,as that is allowed only calendar spreads and that too only on futures. To do this you don’t really need a spread order, either place two orders one after the other at IOC, or else use a basket order.
I am trying to use the ZT for placing spread orders. I want to buy HDFC Jul Futures and sell HDFCBANK Jul Futures. I selected order type 2L and tried placing the order at market price (i entered 0 for price). It is giving me an error “Expiry date for the second leg should be greater than that of the first leg”. I wanted to do pair trading for the futures of different stocks for the same month.
Ah.. Ajith, if you are doing pair trading, better option will be basket. Spread orders work best with calendar spreads.
Sir
a) if i want to execute iron condor strategy in nifty options, whether placing individually like for ex: sell 8700 ce, buy 9000ce and sell 7300 pe, buy 7100 pe or is there any better way of placing may be one shot.
b) if i trade above strategy for 1 lot, what is the margin required at the time of placement of order.
c) can i hold this strategy till expiry i.e position
a. You can use basket orders, Check this.
b. You can use our SPAN calculator for this, https://zerodha.com/margin-calculator/SPAN/
c. Yes, as long as you have the requisite margin.
Hi,
I would like to do nifty 8600-Aug CE sell and nifty 8800-Sep call buy. the price between two pairs almost equal. In this scenario how much margin require for 1 lot.. how the exit strategy will work. can i close same time both order?.. or is it flexible to close each one separate?.
Use our SPAN calculator for margins: https://zerodha.com/margin-calculator/SPAN/. Yes you can close both at same time as market orders by clicking on square off on admin window or individually as limit/market. Since you are trading Nifty options which are quite liquid, squaring off at market both at same time should be okay.
hi,
i tried to enter spread contract. Take a example.
1) buy 1 lot futures September 2015 price 7980
sell 1 lot futures october 2015 price “blank” (since i am unable to enter price in spread contract)
order is rejected giving reason “price difference out of operating range.
2) i then tried 2L contract and it is also cancelled immediately (may be because nifty moves so fast that amount i entered does not take place immediately). I tried to buy at Bid and sell at Ask price.
3) one more query. is the margin amount required is same in spread and 2L contracts????
in the above example, buy 1 contract september and sell 1 contract october, span calculator shows margin of approximately Rs 4,000.
This mean margin will be same in spread as well as 2L contracts????
Regards
Hussain
hi again,
update on my above query. i tried again and this time instead of any price, i just entered “0” in buy order and it is executed immediately.
buy 1 contract September 2015 7984.40
sell 1 contract october 2015 8023.40
so my query is now, it is not possible to enter in spread contract both buy/sell price ourself????
Hussain when u r placing spread orders, you basically have to place the difference between the two future contracts that you want the trade to be executed. So if you want to buy sept fut and sell Oct, mention the difference between the two in the first space u get. So assuming the difference currently is 50, and you place for sept as 7980, it is out of range, so order gets rejected. When you placed 0, it is considered as market, and hence gets executed immediately. When it is executed, sept is bought and Oct is sold simultaneously at market price.
So while trading spreads, you need to place the difference between both the contracts at which u want to trigger buy/sell. The easier way to trade them is by adding the spread contract directly on the marketwatch, check out the post above which shows how.
Yes 2L futures orders and spread is the same. Margin required is also the same.
Thanks Nitin, its a great help. Am confused since last many days.
one more question. if i put spread contract, it is asking for approximately Rs. 23,000 as margin, whereas one leg margin is approximately 16,500.
As i read notes, i understand that at a time only one leg amount is required as margin. please clarify,
Thanks
The full margin benefit kicks in only once the position is taken. Until then u get only a partial margin benefit, hence 23000 instead of 33000.
Hi Nithin, Zerodha Team,
Can we trade spread order for NSE options ?
Assume I want to trade calendar spread sell 8500-OCT-PE, Buy 8500-NOV-PE and I want to ensure I get it for price difference of lets say less than 10 RS, and sell when I make 10RS profit. Is it possible to trade Spread like this ? if yes then is the order IOC or can be DAY order ?
Ankit, you can currently trade on calendar spreads on futures this way. Options still not recognized by the exchanges.
Hi,
How the brokerage is considered for Spread order and 2L/3L order? Does it charge Rs. 20/- for Spread and 2L/3L order?
Can I place spread order and 2L/3L order from Pi or Kite? If not will I still get the margin benefit in case I create a calendar spread or bull/bear spreads by putting orders separately from Pi or Kite?
Thanks & Regards,
Rajat
If you’re placing a spread order, a single order number is generated and hence you’ll be charged only Rs.20.
2L/3L orders generate different order numbers and you’d be charged Rs.20 for each leg.
You can’t place spread orders through Pi/Kite for now.
in mcx spread order available? and how we buy spread order from pi , please explain detail
Sarath, you will have to place the spread order manually on Pi. Buy one month, and immediately sell the other (or vice versa).
i don’t understand this comment “The easiest way to do this is to sell March futures at 5960 and buy February futures at 5900 in 2 different orders and when the difference is lesser than 60 you make profits, and if the difference is more than 60 you make losses.”
please explain with some maths
Check this: http://tradingqna.com/229/what-is-a-spread-order-and-how-is-it-useful
Hi Nitin,
I work with Spread Orders and BO quite extensively and would like to thank you for making these tool available to intraday traders like me.
I am facing a practical problem that I am looking froward to your guidance on solving it.
Let’s say that I place two separate spread orders:
1. SP order – Short BANKNIFTY16JANFUT and Buy BANKNIFTY16FEBFUT
2. 2L order – Short BANKNIFTY16JANFUT and Buy NIFTY16JANFUT
After a few minutes, I want to exit order #1 but want keep order #2 open. If I square off using “Admin Positions” then I will have to exit both the orders as all BANKNIFTY16JANFUT positions will feature as one row in the “Admin Positions” window and will have to be squared-off together.
Please let me know how I can exit individual Span Orders separately without messing up all of my Open positions.
Thanks,
Aziz
Aziz, instead of squaring off from admin positions, you can just take an opposite position (the same way you took an entry position) using the buy/sell/2L order option.
Thanks Nitin for your response.
But if I take opposite position will I not be charged brokerage+exchange fees twice?
On the Admin position window, when you select a particular line item to square off, you can specify the quantity you wish to square off instead of squaring off the entire position.
In your example, you’d highlight the Bank Nifty 16 Jan fut line and
a) If you’re using ZT, select “Square off Exact Qty” option on the bottom of the window and enter the quantity you wish to square off
b) If you’re using Pi, untick “Square off Entire Qty” option on the bottom of the window and enter the quantity you wish to square off
Alternatively, you can also place a counter order. Exchange fees are always a percentage of your turnover, so it wouldn’t matter. Brokerage would depend on the number of orders you place
hi nitin sir
the complete benefit of 2l spread will be after both limb execution.
but then basic margin requirement will be high…. and margin benefit will be available later on.
am i correct?
Hello
I am getting crude Oil spread contracts on Pi platform.
Please help me on this issue.
We don’t have spread orders available on Pi just yet. If you’d like to trade the crude spread, please place orders for each scrip individually.
I have entered a Futures Calendar spread at a certain spread. How do I square off my Spread trade using ZT.
You can place a counter spread order to square off your positions. You can also place 2 counter orders and square off.
Hello Sir,
In a Calendar spread max. loss is limited (difference in strike)
in this case what will be the margin blocked?
It will be calculated separately or max. loss
You can calculate it yourself: https://zerodha.com/margin-calculator/SPAN/. Margin blocked is quite low, Nifty Feb/March it is around 12k.
I am planning to initiate BULL spread in Reliance by Buying 980CALL and Selling 1000 call and the spread difference is 6.7.. The spread value is increasing from 6.7 to 8 during the market hours and i dont want to waste the time in tracking the spread difference.. Is there any way by placing the order that if the spread value increases to 8 the order should execute(Not automatically) but by placing the limit order difference of 8..Kindly suggest..
Not currently possible Ram.
Hello Nitin,
I want to request u if u can do something on Pi / Kite to check on spread between two correlated stocks (specified by user) for intraday … like relcap/relinfra on adding standard deviation parameter… let me know or any other option for safe trading for small retail traders or anything on PAIR TRADING..
Plz assist
Sir,
Can you please clarify on the below spread order
I want to place the below spread order:
BUY 1 LOT SBIN Futures at
BUY 1 LOT SBIN 170 Frb PUT
How much margin I need to place the spread order? I see from span calculator that I need 6000 Rs to place this order. Does the spread order will get executed when both orders reach the buy price? Can I carry this to the next day?
Regards
Chandra
1. Yes
2. Yes
Thank you sir. One more question, if i place the spread order and if they both(2L) get executed at same time, the margin requirement is same as computed margin from span calc- is this correct
Regards
Chandra
But both won’t get executed at same time ever. So ideally you need to have the margin without the margin benefit to take both the positions.
Hi Sir, If both orders get executed at same time (in 2L ) , all I need to maintain the margin calculated in span calc,is this correct?
Regards
Chandra
Yep.
Thanks Sir
Hi,
Can you please clarify on the below questions on spread orders:
I want to buy SBIN FUT Mar at 157 and SBIN Mar 165 PUT at 14. The total margin required shows – 14280 from the span calculator.
If I place both orders separately [instead of placing 2L spread order]how much margin do I require?
Assume I started placing SBIN Fut buy order first and then SBIN 165 Put
1.If I buy SBIN Fut first and then 165 Put, Do I require 54580 + 28000 margin? – [54580 for span calculator for SBIN future and for 165 put, its 2000*14=28000]
2.Once both are get executed , the margin will get adjusted automatically to 14280 and I will be left with rest of the money in my account for trading? or entire 54580+28000 will get blocked till I sell them?
Regards
Anil
1.
2. yes, the rest of margin will get unblocked.
In kite how i know the market figure of sensex,nifty
In the search box, mention index. You will see Nifty, you can add this to the marketwatch.
I want to request u if u can do something on Pi / Kite to check on spread between two correlated stocks (specified by user) for intraday … like relcap/relinfra on adding standard deviation parameter… let me know or any other option for safe trading for small retail traders or anything on PAIR TRADING..
Plz assist
I posted a Pic… or is it possible to add COmpare Stock option in KITE where we can compare two stock together adding standard deviation… Kindly assist
Compare on the charts will be available soon. But the other bit you asked is a little tricky and will take time.
thanks for the reply.. thanks for adding compare on kite or Pie .. plz ask them to add standard deviation on it too… also ..please do add some material or technique for pair tradinf ( Different stocks)
Thanks & Regards…
Sir
is there any other platform except Nest Trder to enter multi-leg (2L/3L) order or Basket Order and is there any chance to enable that in Pi or Kite in future.
Currently only on NEST, but yeah should be available on Kite/Pi in future.
I build a algo trading strategy in excel for speed order.
1. Want to integrate excel trading in PI/kite. For this I have lack of knowledge regarding integration code. Will zerodha provide it free or chargeable? If chargeable, how much.(for algo trading facility I saw charge is Rs.2000pm)
2. Initially want to trade with 10 lot in single transaction and around 40-50 nos of trade will be initiate.. as I know zerodha charge on transaction + govt taxes. Please confirm
We will not be able to help you with any integration. Buy yes, using Kite.trade you can fire orders through excel on our web based platform. All technical queries answered here: https://kite.trade/
Thanks for ur confirmation..
Kindly tell one more thing.. is it possible to proceed 2L order?
& If I established algo excel trading, what will be the charges and how to proceed
Best if you can send an email to [email protected] and speak on the phone.
Hi,
I’m new to Zerodha and forgive me if this has been answered already. I would like to place option spreads with 4 legs. When I want to do that, i would like all 4 legs to be executed at once. Otherwise I’ll be off the mark from my spread analysed position. Which is the best to place such an order?
Example:
Buy 8000 PUT
Sell 8100 PUT & Call
Buy 8200 Call
Thanks for your help
Hmm.. currently no single window to place the orders. YOu will need to execute them individually.
In the NEST platform I see that we need to give the price of each option of a 3 leg order. But I want to give a total premium (of all the three) which I am ready to pay and not the prices of each leg. I don’t care what the premium of each leg is. All I care is that the total premium paid by me is less than the one specified by me. Is there such a facility either in Pi or in NEST? I came to understand that such facilities are available in trading platforms world over, for example – thinkorswim in USA.
Currently not available here. Also placing multi-leg orders based on a single premium number you are tracking, construes as an algo in India. Tricky to get it approved. Also, liquidity issues will make it tough to execute at the exact price of premium mentioned.
It might be a little difficult to get it approved, if it is construed as an algo, I agree. But zerodha can give a try as this facility is available world over. Zerodha is doing a lot of work compared to many other brokers in India , I appreciate. But we need to catch up with western countries with regard to options, multiple orders and conditional orders. With this, Zerodha can really make a difference in trading world.
I differ with the last sentence. I don’t want the set of trades to be executed at the exact premium. It’s like a limit order. I want them to be executed when the combo price is equal or less than the premium.
When the combo price is equal, what is the guarantee that multiple legs will get filled for your quantity? That is the issue
great points altogether, you just won a new reader. What could you suggest about your publish that you simply made a few days ago? Any positive?
Sir.Can I place spread order in currency segment.?
Yeah you can.
I tried to enter 2L order from spread order window.
1. Short 10 lot, 8100 PE Nifty 16 July, current price 4.40
2. Long 10 lot, 8000 PE Nifty 16 July, current price 3.00
but the order gets failed with the message, Margin required 385794, these are similar to what if I have shorted naked 8100 PE. Why I am not getting any margin benefits? The theoretical maximum possible loss in this spread is 7500/- only.
This way retail investor can never write options. What’s the use of around 1k return on 4L blocked for 15 days that also with risk. That’s around 0.25% only.
Are you guys planning to bring GTC orders?
Thanks in advance 🙂
Yep, on our list of things to do.
When will GTC be implemented? Any timeline?
Hello Sir,
Can we increase spread order from 3 to 4 in nest trading?
thanks
Hmm.. not for now.
Hello Nithinji,
I would like to focus on box spread where I need to open a positon at a time. is there is any chance nest or now can provide 4 leg for that?. currently maximum 3 leg is only available.
thanks and regards
Currently only 4 possible.
4 or 3 Mr, Nithin? if 4 is not possible, is there any chance we can order box arbitrage with automated system?.
thanks
Automated system is tough, but have you checked Kite API’s https://kite.trade/docs/connect/v1/
thank you Nithinji.
let me try
Can’t we use basket order for 4 legs strategy?
You can.
Hi Nithin !
I have few queries..
1. Nifty spot is at 8765 and I’m bearish on the market and I want to do debit spreads…like
Buy nifty 8700 PE – 76
Sell nifty 8600 PE – 51
My investment will be 76-51= 25 rs is this correct ? This much only will debited once my order is executed?
How to execute this order? Is it better if do spread order or normal separate order?
And I see I can’t find spread order on kite…?
And another question..
If I place a after market order today after 3:30pm..
Will it executed at 9 or 9:15 am? The next day?
Thank you
Karthik
Hi Karthik,
That’s not how it works. The systems compute the margins on a portfolio basis. This will the margin requirement:
You can use the margin calculator to compute margins for such positions: https://zerodha.com/margin-calculator/SPAN/
There’s no spread order facility on Kite yet.
You can place AMO from 4:00 pm, orders will be sent at 9.15 am
Hi,
I am trying to place spread order for index but 2nd row is disabled all the time. I am not able to place spread order.
Do I need to place any additional request or anything to get it activated ?
Regards,
Amit
The 2nd row will change based on the contract you select in the first row, you can’t edit it. Assume, you select Nifty Future current month in the first row, the second row is automatically set to Nifty Future of the next month. You won’t be able to change/modify the contract.
I want to write option order on sum basis. Lets see an example
I sold Nifty 8200 CE @ 132
I sold Nifty 8300 PE @ 132
so total premium I sold is Rs 264
and if sum increase more than 264 I will be in loss and vice versa,
so please let me know that is there any facility by which I can place buy order at 240 and SL at 280 please.
You’ll have to track the contract prices and place the orders individually.
I am eagerly waiting for spread order option in kite, I basically trade in Bank Nifty Credit Spread and Iron Condor. Please do something so that we can place the credit spread or Iron condor at one go.
@Nitin Sir, please add option like spread between two stocks.. I do see u have Compare option however, it gives two line which is not very helpful.. I want to request option like Trading View where u can plus, minus, multiple or divide..
minus and divide will do it for me.. please try to add that in next update.. also kindly add some default scanners for candle formation and expert advisors
Is a spread between two different contracts say Nifty and Bank Nifty, across two months, Near (Nifty long) and Middle (Bank Nifty short) possible and will there be margin benefit?
No margin benefit.
Is there an option now to place spread order in zerodha? If yes, how? Is kite enough? or Do i need to install NEST? or PI? or Zerodha doesn’t have option?
On Kite not possible currently. But yes through Pi or Kite you can.
How can i place a spread order in pi? i’m not able to find anything regarding this on trading QNA as well.
Thanks in advance
Prateek, spread orders aren’t available on Pi and Kite.
Is it available on “NOW”
Yes, spread orders are available on NOW.
Hey,
I am wanting to place a calendar spread order but I don’t see any option to place spread order either in kite or Pi.
Does that mean we at zerodha cannot place a spread order!!? Or do we have to place two different orders?
Vinit, spread orders are available on Kite but the feature is on our list of things to do. Yes, you will have to place 2 orders.
What is expected timeline to incorporate the Multi-leg orders like Spread/2L/3L/4L orders etc. on Pi or Kite?
Dear Nitin
Are spread order available on kite? Is that a exchange product and liquidity available ?
when spread order will be available form normal future segment ?
Hey Sudheer, spread orders are not available on Kite right now. It’s a special product type and liquidity depends on what instruments you’re placing the orders for.
Dear nitin
why are you not allowing exchange approved strategy for arbitrage like calender spread and cash and future from other platform like symphony or greek soft as it is difficult to develop algo in any other methods .
you will get brokerage and business , problem is that these vendors are tieing up with brokers on high brokerage and arbitrage becomes unviable if we count brokerage and taxes , your platform can be a big relief with these vendors and will give a best alternatives for algo traders.
kindly look into at the earliest .
regards
sudheer
Hey Sudheer, I recommend you check out https://kite.trade We provide APIs that you can use to build your own trading platform. The features you’re talking about are currently being developed by the team, but will take a little time to go live.
Dear Mattii
Thanks for the feedback can you elaborate how much time needed for calender spread and cash to future arbitrage orders .
But still my query remain unanswered , when IIFL, finvasia , composite edge, indira secuirities master trust can offer algo trading with symphony , greek soft , omnesy why zerodha does not extend platform to its customers for algo arbitrage ?
In the end zerodha will get business if these broker can get approval within three months why zerodha can not ?
please look into matter urgently
sudheer
Sudheer, no timelines as such, we’ll keep you posted.
Hi,
While placing Spread order we can see three order types SP, 2L and 3L
In 2L and 3L multiple orders will be placed so at a time whether it will be cancelled or traded, But How “SP” order type is different from Normal orders, when to use spread order with order type SP can any one explain how to use.
Nitin,
Theres a slight issue wrt the Margin calculation for spreads I think. Consider a customised Call spread (i.e. slightly different than the usual call spread) with both legs having same maturity i.e. say Nifty spot is at 10500 and so you Buy Nifty 25 contracts 10600 Calls on Expiry Dec 2017 and Sell Nifty 25 contracts 10400 Calls on Expiry Dec 2017. This means the short call obviously is ITM and needs margin and the long call is OTM and needs premium to be paid. So given that its a spread for same underlying and same expiry the margin needed on the short call side must be drastically reduced (due to the long component in the other leg) as compared to a position which purely has a short call position. This is not observed on the Zerodha margin calculator. Can you kindly explain why is it so?
Under rollover position example, if I put 0 and 0, will the trade be executed at market price and not cancelled instead. plz confirm
sir,
suppose i trade the below spread order:
buy 1 lot jan nifty @10690
sell 1 lot feb nifty @10710
for the above trades the combined required margin is approx 16k (span calculator) and individual margin is 90k each.
but while placing the orders i will be placing the orders separately, so do i need to require to have full 90 k margin while placing the first order and then after placing the second order the combined margin will drop to 16k?
wont i be able to purchase the above spread if i have 20k?
also i want to know that suppose i purchase the first order as mis, and then the 2nd one also mis. then will it be considered as spread order and also will i be able to convert it to normal afterwards (considering that i have 20k funds available only)?
thanks in advance.
Dear Nithin,
I’m unable to find the “SP” option anywhere on Kite mobile platform or on Kite web.
Is there some other platform that needs to be used?
I called Zerodha and the executive asked me to place two different orders for buy and sell which contradicts this post.
Can you help?
Spead orders aren’t available on Kite as of now, Harshad.
Hi
I want to place spread order, which application can enable me to do so.
Pi or Kite. And How
Hey Rakesh, spread orders aren’t available on Kite and Pi.
When in India direct Spread option trade will be allowed? In that case I guess only a small margin will be required for credit spread.
Hi sir,
I want put a spread order in axis bank sep18future buy and axis bank oct18 future sell.
In span calculator showing margin 21840/-
Iam puting in spread order in zerodha platform order rejected margin required 120000/-
Is there any problem
When you are planning to implement spread order through your mobile trading app kite
Please do it early and inform all your user
how to place spread order in kite desktop or kite mobil
How to activate NEST TRADER?
You can need both the Buy and Sell leg order separately. The spread margin benefit will be released once the position is covered.
Hi,
How to place order for Direct spread in kite. Which option to use for trading only spread?
But how to place the spread order simultaneously.
sir,
suppose i trade the below spread order:
buy 1 lot OCT nifty
sell 1 lot NOV nifty
for the above trades the combined required margin is approx 20k (span calculator) and individual margin is 95k each.
but while placing the orders i will be placing the orders separately, so do i need to require to have 95k margin or 190k(95k+95k) or just 20k??
thanks in advance.
Since the orders are placed separately, you’ll need full margins. Only once both orders are executed is the extra margin released. This is built so because there is no gurantee that both orders will be filled at the same time.