Zerodha Kite - How to trade, buy and sell options?

Published on Tuesday, August 28, 2018 by Chittorgarh.com Team | Modified on Thursday, May 7, 2020

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Zerodha Kite - How to trade, buy and sell options?

Zerodha, the leading discount stock broker, offers trading services in equity, currency and commodity options. Zerodha customers can buy stocks, mutual funds, IPO and trade in derivatives at BSE, NSE and MCX.

In this article we will talk about:

  • How to activate the F&O segment in Zerodha?
  • How to buy call/put options in Zerodha?
  • How to cancel or modify an open options contract order?
  • How to sell an options contract order?

Zerodha Options Trading Platform

Zerodha offers 2 trading platforms to buy and sell options:

  • Zerodha Kite
  • Sensibull

Kite is a flagship online trading platform by Zerodha. It is available in the website and mobile trading app format.

Sensibull is an options trading platform designed to make options trading easier and faster for small traders. It is loaded with tools like Options Strategies Builder, Open Interest, FII DII Data, Options Trading Tips, for Nifty, Bank Nifty and NSE Options.


How to activate the F&O segment in Zerodha?

To trade in F&O in Zerodha, you need to enable the F&O segment in your trading account, if you have not opted for F&O trading at the time of account opening. You have to submit an online application and upload a few documents.

Steps to activate the F&O segment in Zerodha

  • Log in to Zerodha Console with your kite login.
  • Click on your Client ID in the top right and click the 'My Profile' link.
  • In the left menu, click on 'Segment activation' link
  • Click 'Activate segments' button
  • Fill the form as per the below screenshot.
  • Click the 'Submit' button
  • The F&O segment will be enabled in 48 hours.

 

activate the F&O segment in Zerodha

 


How to Trade Options in Zerodha Kite?

On the successful opening of an account with Zerodha, you will be sent a welcome email and a password email. The welcome email contains a login ID/password while the password email contains a login ID/password for Zerodha Kite.

Steps to buy/sell Equity or Nifty Options in Zerodha

  1. Log in to Zerodha Kite website or mobile app
  2. Add funds to your Zerodha account
  3. Add desired Options to your market watch
  4. Place a Buy order for the Option
  5. Understanding the Options contract
  6. Check for the execution of the order

Now let's discuss each of these steps of buying a Call/Put option in detail:


How to Buy Call/Put Options in Zerodha?

1. Log in to Zerodha Kite website or mobile app

Open https://kite.zerodha.com/ webiste a web browser on your computer or Kite mobile app on your phone and login.


2. Add Funds to your Zerodha account

The next step is to add funds to your account. On log in, you will be taken to the Zerodha Kite dashboard. This page gives you an overview of your trading with data on Funds available, your existing holdings and positions etc.

To add funds to your account, click on 'Funds' from the top menu. You will be taken to the 'Funds Page'. Now click on the green colored 'ADD FUNDS' button. This will open an online payment gateway. You need to select your bank and complete the process as you do while transferring money online.


3. Add desired Options to your market watch

To buy a Call/Put Options contract on Zerodha, you need to first add the scrip to your marketwatch. You can create up to 5 MarketWatch's, with maximum 40 scrips per marketwatch. To add a scrip to market watch, you need to use the 'Universal Search'.

On your left of the page, you will find the search box (marked in red). Zerodha calls it 'Universal Search'. The search box gives you access to all Option contracts across all the exchanges.

Enter a few characters of the name of the Option contract you want to add and click on '+'. For example, to add Nifty Nifty 50 index, enter nifty 50 in the search bar, select and click on +. Similarly, you can search and add option contracts of companies and bank nifty.

 

Add Options Contract To Zerodha Kite Marketwatch

 

Understanding the Options contract

Hover your mouse over any of the Option contracts on your market watch and a buy (B) and sell (S) button will be activated. When you hover your mouse, in addition, to buy (B) and sell (S) buttons, you will get access to 4 other buttons that get activated. Two of the highly useful buttons in options trading are:

 

Understanding Options Contract in Zerodha Kite

 

Market Depth:

It provides you with the best 5 bids and offers/asks for a particular Option contract.

 

Options Market Depth in Zerodha Kite

 

Qty indicates the quantity available for buying/selling at a particular price

Orders indicate the number of orders pending at that particular price on the exchange.

  • O: Open price for the day
  • H: Highest price for the day
  • L: Lowest price for the day
  • C: Closing price of the previous day
  • LTT: Last Traded time
  • Expiry: The day when the Option contract will expire
  • OI: Open Interest
  • OI Day High
  • OI Day Low

Charts:

The charts are used by experienced traders to do technical analysis of the stocks.


4. Placing an Option Buy order

Once you have added desired option contracts in your market watch, you are ready to buy it.

There are two ways to place a BUY order:

  1. Hover your mouse over any of the Option contracts on your market watch and a buy (B) and sell (S) button will be activated. Click on 'B' to activate the order form.

     

    Place Options Order in Zerodha Kite

     

  2. Alternatively scroll up or down on the market watch and hit 'B' in your keyboard to open the order form.

     

    Buy Call/Put Option Zerodha Kite

     

There are key 4 elements (boxed in red) of the order form:

  • MIS and NRML

    MIS stand for Margin Intraday Square Off and is useful for traders who are doing intraday trading in Options. Intraday trading means to buy and sell of the order on the same day. The trade is completed on that day. Nothing is carried off to the next day. Zerodha offers margin leverage for intraday traders. There is no margin provided for traders buying options as there is no margin requirement for such a trade. However, the seller of options is required to maintain a margin. When you use an MIS code, you only need to maintain 50% of the margin. So, entering this code gives 50% margin leverage to Option sellers and allows them to do more trade with the same amount of money.

    NRML stands for normal orders.

  • Order Types

    You have 4 options in orders to choose from:

    • Limit (LMT) order: It is used to place orders at a predetermined price
    • Market (MKT) order: It is used to place orders at the best available price.
    • Stoploss (SL): SL for orders with a predetermined price to be executed when the trigger is hit.
    • Stoploss Market (SL-M): For orders when a market order is to be executed when a trigger is hit.
  • Qty

    Each option contract has a lot size. Each lot size consists of a fixed number of shares as decided by the exchange. Nifty contracts have lot size of 75 shares. Enter the qty as per the lot size.

  • Price

    You need to enter the premium price for each share.


5. Check for the execution of the order

Most beginners to Options trading commit a mistake that successful placing of an order means the order is executed. But it doesn't always happen. Many times, there are no sellers available for the price you quoted and hence the order remains open. You can check if your order is executed or not by clicking the 'Orders' button in the top menu:

 

Option Orders Zerodha Kite

 

The orders page will inform you of Open and Executed orders. You can either wait for the Open orders to be executed when the price comes down and sellers are available or can cancel or modify the order.


How to cancel or modify an open Options contract order?

Hover your mouse on the specific contract you want to cancel or modify. Click on the blue-colored button appearing next to the contract. A drop-down menu will appear. Click on cancel or cancel the order or on 'modify' to change the order. This will open the order form where you can change the price of the order. Please don't forget to look at the market depth to know the best 5 bids and offers/asks available for your Option contract and enter the price accordingly.

 

 Cancel Modify Option Orders Zerodha Kite

 


How to sell an Options contract order?

You can sell an existing Call/Put option contract in Zerodha in two ways:

  1. Go to Market Watch and hover your mouse on the specific contract you wish to sell. This will activate the buy (B) and the sell (S) button. Click on 'S' to activate the order form. Enter price and Qty and click on Sell button. Click on 'orders' on the top menu to check if your order is executed. Modify or cancel the order if required following the steps explained above.

     

    Sell Option Orders Zerodha Kite

     

  2. Alternatively you can also click on the 'Positions' tab on the top menu. The page looks like this:

     

     Sell Call Option Zerodha Kite

     

    Here, tick the box of the specific contract, you want to sell and a blue-colored 'Exit Button will get activated. Click the 'Exit' button to open the order form. Choose the order type and enter price and quantiry details.


Read more about Zerodha




Frequently Asked Questions

  1. 1. How to trade NIFTY Options Zerodha?

    You can trade Nifty Options and other types of Options with Zerodha using the Kite website or mobile app. Before you get into trading Nifty options, check whether the F&O segment is activated for your account. If not, visit the Zerodha Console > My Profile > Segment activation page to activate the F&O segment.

    Steps to place buy order for options in Zerodha

    1. Log in to the Zerodha Kite website or mobile app.
    2. Search for desired NIFTY Options and add it to your market watch by clicking on the '+' symbol
    3. Place a Buy order for the Option by clicking in the buy (B) button.
    4. Enter the details like order type, quantity, price etc., and click 'Buy'
    5. Check the status of your order in the 'Orders' section

    Steps to place sell order for options in Zerodha

    1. Log in to the Zerodha Kite website or mobile app.
    2. Search for desired NIFTY Options and add it to your market watch by clicking on the '+' symbol
    3. Place a Sell order for the Option by clicking in the sell (S) button.
    4. Enter the details like order type, quantity, price etc., and click 'Buy'
    5. Check the status of your order in the 'Orders' section

     

  2. 2. How to sell options in Zerodha?

    Selling options contact in Zerodha is easy and online. You could use the Zerodha Kite website or Kite mobile app to sell options.

    Steps to sell options in Zerodha

    1. Log in to the Zerodha kite website or Kite mobile app.
    2. Search for desired NIFTY Options and add it to your market watch by clicking on the '+' symbol
    3. Place a Sell order for the Option by clicking in the sell (S) button.
    4. Enter the details like order type, quantity, price etc., and click 'Buy'
    5. Check the status of your order in the 'Orders' section

     

  3. 3. How to activate options in Zerodha?

    You can activate Options in Zerodha online in the Zerodha Console. Following steps will help you activate the F&O (derivatives) segment in Zerodha:

    1. Login to Zerodha Console
    2. Click on your account profile at the top right and then on 'My Profile'
    3. Click on segment activation on the left menu.
    4. Click on the 'Activate Segment' button.
    5. Check the box of the segment you want to enable.
    6. Select your gross income.
    7. Upload Income document.
    8. Click 'Submit'

    The F&O segment will be activated in 48 hours.

     

  4. 4. How to add weekly options in Zerodha?

    You can add weekly options in Zerodha on Kite Web or Kite Mobile App using the steps mentioned below.

    Steps to add Weekly Options in Zerodha

    • Log in to Zerodha Kite Website or Mobile App
    • In the search bar, type in the Options contract name followed by strike price.
    • Select the contract from the drop-down of search results and click on the '+' symbol.

     

  5. 5. How to put stop loss in Zerodha options?

    Zerodha offers a Stop Loss order facility in Zerodha Options to help you minimize your losses in case the price of the contract moves against your expectations. The process to place a stop-loss order is the same as any normal order.

    You can place 2 types of Stop Loss order:

    • SL-M order type: In this order, your position will be squared off at the market price.
    • SL order type: In this order, your position will be squared off at the price set by you.

    While filling the order form, you need to select SL or SL-M, enter quantity and Trigger Price.

     

  6. 6. What are the charges for options in Zerodha?

    Zerodha charges flat ₹20 per executed order brokerage on Options trading. One order may have 1 or more lots in it. The brokerage is charged on the order and not on the lots. In addition customer has to pay government taxes including STT, exchange transaction changes, SEBI charges, GST ect. Visit Zerodha Brokerage page for more detail.

     

  7. 7. How to enable options Zerodha?

    You can activate options online in the Zerodha Console. Once your online request for segment activation is received, it takes up to 48 hrs for Zerodha to enable the segment. You receive a message once the segment is enabled.

    Steps to enable options in Zerodha

    1. Log in to Zerodha Console (Back Office).
    2. Click on your Customer ID in the top right.
    3. Click on the 'My Profile' link.
    4. Click on the 'Segment activation' link in the left menu.
    5. Click on the 'Activate Segment' button.
    6. Check the box of the segment you want to enable.
    7. Select your gross income.
    8. Upload your income proof.
    9. Click 'Submit'

     

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