What is the F&O ban? The idea of banning shares in F&O is to avoid excessive speculative activity. The stock exchange imposes an F&O ban when the aggregate open interest on a stock crosses 95 percent of the market-wide position limit (MWPL). Open interest refers to all pending buy and sell positions in securities or futures and options contracts. Futures and options trading takes place on the derivatives market.
In certain circumstances, when stock exchanges feel that the sanctity of trades is harmed and may endanger traders, they prohibit trading F&O in a particular stock. The ban is only for a specific share (s) and not for the entire derivatives market. Please note that exchanges may also trigger a market suspension in the stock, bond or currency markets). When it is said that a specific share is on the ban list of F&O, it means that traders will not be able to open any new or new positions in that stock in the derivatives market unless the ban is lifted.
Bought futures and stock options are forced to square their positions, which means they have to reduce profits on their trades. Therefore, traders are required to be extremely cautious and alert when trading futures and options. The impact of the F&O ban on stock prices that are put under the ban period is immense and a trader who wants to trade futures and options should be aware of this. Anything is possible, but it seems VERY unlikely that options trading will be banned before June, so I think you're okay.
One of those regulations, or restrictions to be precise, that is related to futures and options trading (F&O) is the F&O ban. One of the things you should know if you intend to trade futures and options (F&O) is that stock exchanges impose a ban on F&O at certain times. Although this particular discussion of the F&O ban could have projected a negative picture in terms of trading futures and options, trading in the derivatives market can prove extremely profitable for investors if they are very alert to the situation and have the necessary market information and knowledge. The NSE (National Stock Exchange) offers a crucial feature in this regard, since in its trading system, an alert is displayed once the open interest of futures and options contracts in a stock crosses 60 percent of the predetermined position limit across the market.
Trading futures and options involves paying close attention to the finer details that can help make or break fortunes.
