Lot sizes reduced for various NSE F&O Contracts

October 29, 2014

Traders,

If you are following us on Zerodha Circulars, you are probably already aware of the revision in F&O lot sizes for a bunch of contracts on NSE. This post will answer any query that you may have on how this circular could impact you.

Firstly, why are the lot sizes reduced/revised?

SEBI has prescribed to the Exchanges that the contract value of all Future and Option contracts be around the Rs.2 lac.There has been a significant increase in Nifty levels over the past one year where Nifty has risen from 6000 levels to almost 8000 levels thereby increasing the contract value to Rs.4 lac. (Contract Value = Lot Size*LTP ; 8000*50 =4,00,000). The same case with many of the stock futures contract.

Reduction of lot size by the exchanges to contract value of Rs 2lks will reduce the margin requirements and hence will also make it easier for retail investors to participate in. This action should ideally improve liquidity in most of these contracts.The new lot sizes are effective from Oct 31st, 2014.

What are the new lot sizes?

For Indices

Sl.No Index Name Current lot size Revised/New lot size
1 Nifty 50 25
2 Nifty Midcap 50 150 75

 

Applicable for: November, December and January contracts

On 31st October when the market opens, you will be able to buy/sell based on the new lot size for all the Nifty and Nifty Midcap contracts.

Margin requirements will drop proportionately. So if for 50 Nifty you need Rs 32,000 for 25 you will need half which is Rs 16000. The same for option shorting margin requirements.

Open positions carried forward from Thu, Oct 30th will automatically get adjusted by end of day on the 30th. So if you had 100 (2 lots of Nov Nifty Fut) on Oct 30th, on the 31st you will still have 100 (but 4 lots of Nov Nifty Fut).

*Bank Nifty lot size remains the same.

For Stocks

Categorized into four groups

Sl.No Change in Lot Size Number  Effective from which expiry?
1 Lot size decreased 48 November 2014 onwards
2 Lot size decreased but
new lot size not a multiple
of old lot size
7 January 2015 onwards
3 Lot size increased 1 January 2015 onwards
4 Unchanged 83 NA
  1. Lot size decreased for these 48 stocks and similar to indices contracts this is applicable for all Nov, Dec, and Jan contracts. You can see the list of stocks numbered 1 to 48 on this document.  So when the market opens on Fri, 31st if you held 1000 of Nov TataMot (1 lot) from 30th, it will still be 1000 of Nov TataMot but 2 lots of 500. Margin again will drop proportionately.
  2. Lot size decreased for these 7 stocks, but not a multiple of old lot size. So to avoid operational complexities the new lot size for these 7 stocks will be only for Jan 2015 contract and onwards. See the stocks numbered 1 to 7 in this document. So you will trade the Nov and Dec contracts for these stocks with the old lot size itself.
  3. Lot size increased for 1 stock (United Breweries), again like point 2 this increased lot size would be applicable for Jan 2015 contract and onwards.
  4. Lot size unchanged for 83 stocks, you can see the list numbered 1 – 83 in this document.

Click hear to read the NSE circular.

Brokerage at Zerodha is Rs 20 or 0.01% whichever is lower per executed order.  Assuming Nifty goes down to 7500, if you are someone who trades only one lot the new contract value will be 187500 (7500 x 25) and hence your brokerage for buying this one lot will be Rs 18.75 (0.01% of  187500) and not Rs 20. But if you are trading more than 1 lot, the brokerage will not go above Rs 20. The same applies to all the other contracts.

Our margin and brokerage calculators will be updated shortly.

This decreased lot size will reduce the margin required and make the entry barrier lower for those retail traders who earlier couldn’t participate in F&O due to higher margin requirements. The increased participation should help in better price discovery and also improve the market depth.

Happy Trading,

103 comments

  1. Manish says:

    Thanks for the details around this Venu ! Much needed 🙂

    Hope you guys will soon update your margin calculator on your site as well .

  2. Nitin says:

    Lot size is going to be half so Zerodha is going to reduce the brokrage per lot or not ???

    • Hey, we don’t charge brokerage per lot, so nothing changes.

      “Brokerage at Zerodha is Rs 20 or 0.01% whichever is lower per executed order. Assuming Nifty goes down to 7500, if you are someone who trades only one lot the new contract value will be 187500 (7500 x 25) and hence your brokerage for buying this one lot will be Rs 18.75 (0.01% of 187500) and not Rs 20. But if you are trading more than 1 lot, the brokerage will not go above Rs 20.”

  3. Anish says:

    I’d be paying more brokerage for the same risk.
    Isn’t that right?

    • Manish says:

      How do you think you will pay more brokerage when Zerodha charges fixed ??

      • Like I just mentioned here: we don’t charge brokerage per lot, so nothing changes.

        “Brokerage at Zerodha is Rs 20 or 0.01% whichever is lower per executed order. Assuming Nifty goes down to 7500, if you are someone who trades only one lot the new contract value will be 187500 (7500 x 25) and hence your brokerage for buying this one lot will be Rs 18.75 (0.01% of 187500) and not Rs 20. But if you are trading more than 1 lot, the brokerage will not go above Rs 20.”

        • Anish says:

          If I buy one call option lot size 50 say Nov 8000CE
          The total brokerage I pay for one buy and sell is 20+20 =40

          Now with lot size 25 for the same call
          I have to buy 2 call options for the same risk/reward
          With your example of nifty being at 7500
          The total brokerage would be 2×18.75 (Buy)+ 2×18.75 (Sell) =75

          New to trading correct me if I am wrong

          • Anish says:

            Ok got it ..Its brokerage is per executed order.
            If I execute it as a single order I pay the same brokerage.
            If it is executed as two different orders.I pay more.

            Is that right?

            • 🙂 , it is 20 per executed order, so even if your 1 order gets traded two times, u still pay only for that 1 order you placed. So for example, if you place a buy for 500 nifty calls and it got executed in 3 trades, we don’t charge you Rs 60, but we still charge only Rs 20 as you had placed only 1 order.

          • Anish, we don’t charge per lot, we charge per executed order. So brokerage remains 20 if you buy 25 or 2500 quantity of Nifty calls.

      • hgdgj says:

        If u buy
        nifty of lot 50 assume it will trade 25 once then 25 totally how much brokerage u will pay

  4. Johny says:

    Where can I get list of FNO stocks with respective contract sizes?

  5. karan says:

    sir how much margin is required for cover orders of nifty …..

  6. gilari says:

    Hope zerodha will post a list of stocks with margin requirement

  7. Sukesh says:

    Great, something i had been waiting for.
    Can you please let me know frequently are the lot sizes revised?

    I’m also hoping that NSE will reduce margin requirement ASAP.

    Thanks

  8. Phani Kumar says:

    Thanx for the info, Its great to trade with Zerodha

  9. sridhar says:

    please send mail to me sir. which segment reduced on stocks futures

  10. MRP says:

    when we will use new ZERODHA

    How much time to take for launching new Zerodha Pi

    Thanks

  11. srinivasa says:

    sir, why are you charging Rs.20 as brokerage for option trades

  12. Pramod M says:

    sir,
    i traded 2 lots of natural gas and got profit of Rs 375/-,
    but next day i found only Rs 142/- added to my previous balance.
    can u tell me how villain the karnataka state Stamp charges (STT) is playing the role ? which is not not mentioned in ur brokerage calculator.

    • Biggest culprit would be CTT, the good thing about Karnataka is that the maximum stamp duty per day is only Rs 50. If you do less turnover it might pinch, but is an advantage if trading higher volumes. YOu can see the stamp duty in the drop down box at the end of this page.

  13. Anish Krishnan says:

    Got it…Thanks!!

  14. hrishikesh patil says:

    I want to buy one lot of nov. nifty future today.what will be margin & lot size? is it 25 or 50?

  15. Pradeep says:

    Can you folks update the https://zerodha.com/margin-calculator/Futures/ . It has not been updated yet .

  16. npg says:

    Sir, i was not able to sell TataComm30Oct2014CE420, what might be the reason? 🙁
    i think i lost 3k 🙁

    • Anish says:

      Expect an apology and an attitude..They said all there clients were able to exit positions.

      “As mentioned in our previous email, we resolved the issue at the earliest and all our clients were able to exit their positions. We understand you may have had notional losses but these are few of the risks of internet based trading that all of us are aware of.

      We can assure you that this was a one-off incident and won’t occur in the future.”

      Hope it does not happen again.

  17. Sam says:

    Hi!!
    Thanks for the post as I found it to be very informative.

  18. Khaza says:

    now , we will be able to trade in highly margined scrips as well…Thanks for posting…very informative

  19. vinayak says:

    This is interesting; I was wondering why HDFC Bank (the largest Bank constituent in Nifty) has options with the least OI and higher buy-sell spreads (compared to the other Nifty Bank constituents) yesterday for 14Nov ATM CE/PE options.

    This goes some way to explain it

  20. Kaushik Banerjee says:

    If 2 lacs is the ceiling, why Bank Nifty lot size is not reduced ?

    • 2lks is not the ceiling, around 2lks is the floor. Banknifty contracts hasn’t gone way above 2lks yet, and also reducing a lot of 25 into half which is 12.5 is an operational issue. Need to see how exchange will do this, whenever it is done.

      • Kaushik Banerjee says:

        Thanks for the reply. But Bank Nifty contact value at 25 lot size is even more than Nifty contract value at 50 lot size. And is it necessary it has to be halved. It can be 15.

        • My bad, yes Bank nifty is around 4.28lks around the same as Nifty at 8200. The issue with making the lotsize as 15 is, what do you think will happen to the guys who were holding 1 lot before? He cannot now have 1.8 lots, he either needs to have 1 or 2. The other way to do this would be like what they have done for a few stock contracts above with not even multiple. Introduce a new far month contract with the new lot size. But the problem with this is that people take huge calendar spread trades on Bank nifty, might cause an issue to them. So yeah, let us wait and watch. Something will be done for sure.

  21. shivananda.N says:

    its ok, I will adjust to the market nature …”EVERYTHING IS OK” Thank you “NITHIN”

  22. Kishan says:

    Hi,

    I am interested in opening new zerodha account. I m staying in Mumbai. Can you please help me

    Thanks
    Kishan

  23. srinivasa says:

    Can I know why 8100 PUT prices doubled in spite of gap up opening of almost 100 points in Nifty

  24. mbsrsarma says:

    Pls give info on other stocks which reduced the lot size

  25. Gopinath says:

    It is a good facility that mobile trading app is available in zerodha. But we are highly disappointed that this app is available only for android and blackberry OS mobliles, why not for windows OS phones? Please provide the app for windows OS also.

  26. ds4205 says:

    where to find the survey form for pi and the download of it?

  27. Arijit says:

    Why zerodha charges more brokerage? In your website you told ““Brokerage at Zerodha is Rs 20 or 0.01% whichever is lower per executed order”.

    But I am attaching a screenshot for 3rd November (this is not the first time I can send you more than 10 examples where you charge more brokerage) where you charging brokerage Rs 140,

    Now you tell in your previous post

    hgdgj

    If u buy
    nifty of lot 50 assume it will trade 25 once then 25 totally how much brokerage u will pay

    Reply

    avatar

    31 Oct 2014 at 05:27 AM
    Nithin Kamath

    Still Rs 20, we charge per executed order and not trade.

    Then why in my case its Rs 140/-, it should not be even Rs 40 (Rs 20 + Rs 20). Because my total valuation is Rs 41601.25, so it will be Rs 4.160125.

    And I am attaching screenshot and again I say this is not the first time you have charged more brokerage every time. I can show you screenshot if you needed.

    • Arijit, I guess you have some confusion.

      We charge Rs 20 or 0.01% of the contract value per executed order. If you buy 1 lot of 8300 CE at 150, the contract value would be (8300+150) * 25 = Rs 2.1lks. So unlike what you are thinking contract value is not 150*25(this is just the premium value). I am looking at your order book and you have placed 7 executed orders each with a contract value of more than Rs 2lks. Hence you are charged Rs 20 x 7 = Rs 140.

      Hope this clarifies.

  28. arunshankar.n says:

    Dear Sir,

    I am from Chennai and new to options market and i have been trading it only for the past two months.

    I have been charged around 100 rs per lot for buying and again the same amt for selling. Now after this lot quantity change,I will be charged twice of this.

    I cud understand Zerodha is something different in this concept. But Could you please explain this with my own example.

    For Ex. I have bought 1 lot of Nifty put 8250 @ 60 rs (without adding brokerage of Rs.100) yesterday. This cost me around Rs.1600 ((60*25)+100). Now if I have selling it next week for Rs.75 per lot, I will be getting around Rs.1775((75*25)-100). So Myprofit wud be Rs.125 in this transaction. (Excluding the taxes n other stuffs which will be around 15-20 rs for this transaction)

    How different would be my charges and profit, if I am doing the same with Zerodha?? also I presume the taxes to be same with everyother brokerage company.Also Let me know your AMC charges…

    Thanks,
    Arun

  29. Sukesh says:

    Hi Nithin,

    I see that the markets are volatile during derivative expiry. Lot of markets movements are dependent on derivatives open interest etc.

    This is confusing to me as derivatives is a completely different ball game when compared to the stock/share/cash market. Derivatives only ‘derives’ the value from the underlying.
    How can derivative trades actually effect the broader market? I feel derivatives should be dependent on cash market but how can derivative market influence cash market/Index/underlying?

    Thanks
    Sukesh

  30. Ibohal says:

    NIFTY lot size for far contracts like DEC 2015 in option is still 50 ,why such contracts have not been reduced ,say CE 100000 which is an active contract …….?

    • Didn’t get your quesiton, CE100000?

      • Ibohal says:

        Sorry miss typed as I lakh (1,00,000) it should be 10,000 CE 31 DEC 2015 CONTRACT NIFTY INDEX OPTION, i find lot as 50 instead of 25, is it possible to buy such contract by a retail investor ? Need clarification. Bid /Ask premium value is 200/204.8 as on 4th Dec 2014 market close in the NSE option chain page.

        • Yes, maximum order size for Nifty is 10,000 Nifty. So yeah, you can trade 10,000 Nifty at one time.

          • Ibohal says:

            I cant understand “maximum order size 10,000” . Sir,do you mean 10,000 maximum permissible lots to place buy order by a retail investor. This value is the strike price . What will the margin requirement ? if premium value is 200,traditionally margin value will be 200 times the lot size and number of lots . This Niftyindex option Dec2015 contract is very far contract which was in the newspapers recently for which open interest surges.

            Thanks and regards
            Ibohal

  31. rajanala says:

    Dear Sir,
    Can you kindly give your opinion about short strangle nifty option strategy with dynamic delta neutralisation hedging and is it correct to trade CE & PE 300 points or 250 points away from ATM strike price for a safe and no loss strategy and also to have protection from overnight gap up or gap down market.
    If any dis-adavntages/demerits in this strategy are there, please explain.
    Thanks & Regards.
    Sastri

  32. akshay says:

    zerodha call & trade pe charges kyon leti hai ? ap dusre broker ki tarah free kyon nahi karte ?

  33. nirmalraj says:

    Hi Nithin,

    I’m new to zerodha and I need to buy 3 lots. How much it cost and how do I pay?

  34. Amit says:

    Hi Nitin,

    Why is the lot size for MRF not reduced. its currently at 125 even at time of last revision it was trading well above 30k and now above 40k.

    Is there any rule of minimum lot size (Qty)in stocks and indices

  35. hardik patel says:

    Hi sir i am bye a call 8800 at rs0.05 and tha lot is 4000 so what is the brokerage charge for me?

  36. Shashi Karkhanis says:

    Hi Nithin,

    How have you been ? It’s been long since I wrote to you. Finally me and my partner have moved on from SK to Zerodha in this Month of July 2015. You concept have been able to capture our Minds recently after giving 2-3 months of Thought process. We transferred our Personal accounts & now in process of Shifting our Co-operate account also to you Guys.

    I have come across a interesting column by Sebi. Does it impact the overall Brokerage in Zerodha ? Please check this Link: http://www.sebi.gov.in/cms/sebi_data/attachdocs/1436782665000.pdf

    Sebi is out to completely DUMP the Retail guys from F&O trades, but does it impact HNI’s also ? What’s the view of Zerodha on this ?

    Thanks & Regards,
    Shashi Karkhanis

    • Hi Shashi, The contract value going up was known as SEBI had spoken about it in the press. The positive side is that they increased this to only Rs 5lks and not Rs 10 lks as they had spoken. 75 to 80% of turnover today is in options, this contract value increase shouldn’t make any difference at all. I guess where turnover and hence liquidity can get impacted would be in the stock futures contracts.
      Our view is that it is a bad move. This will mean retail taking more risk rather than less.

  37. suresh.k says:

    How to find the lot sizes of shares

  38. Amit says:

    Is there a limit on how much lot can one buy/sell.
    Ex: i want to buy/sell 10000 qty of nifty 8000 option can i place this order.

  39. Praveen says:

    Presently also the lot size of nifty is reduced to 25 or it had been again made to 50??

  40. mahaveer says:

    I have position in stock future and if it comes in f & o ban, then can I rollover .

  41. Melvin Rebello says:

    Is there any limit on how much lot can one buy/sell.
    Ex: i want to buy/sell 10000 qty of nifty 8000 option can i place this order.

  42. Suhas says:

    Hi,
    I trade in Nifty futures and am not able to enter anything in diclosed qty field.
    Pls help.

    Thanks.
    Suhas

  43. satender phogat says:

    sir ji mujhe acc se lekar zeel tak ke share ka lot size kaise milenge jaise acc ka lot size 400 rupye h… aise hi hr share ka lot size kaise milega

  44. Anjani Nandan says:

    If I buy 10lots of Nifty Options at one go and sell the same 10 lots after sometime, what the brokerage will be??
    Will it be 10lots*Rs20 or just Rs 20 for the whole 10lot order.
    Thanks

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