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

Published on Tuesday, August 28, 2018 by Team | Modified on Thursday, July 25, 2019

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

Bengaluru based discount broker Zerodha offers trading services in equity, currency and commodity options. If you have a trading account with Zerodha and a demat account with Zerodha or any of the registered depositories in India then you can buy and sell equity, commodity, and currency options.

Platforms To Trade Options In Zerodha

Zerodha offers 3 platforms to buy and sell Options-

  • Zerodha Kite- A free web-based trading platform.
  • Zerodha Pi-A free installable trading platform.
  • Zerodha Kite Mobile- A free mobile trading application.

In addition to these, Zerodha also offers some useful tools like Q and Sentinel. Q is a reporting tool while Sentinel is useful for Options traders in setting market alerts for desired stocks, nifty contracts, commodities, and currencies.

How To Trade Using 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 login ID/password for Zerodha's reporting toll 'Q' while the password email contains login ID/password for Zerodha Kite.

6 Steps to buying/selling Equity or Nifty Options in Zerodha

  1. Visit Zerodha Kite website and login using the ID/password given in the mail.
  2. Add desired Options to your market watch
  3. Add Funds to your account
  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 step of buying a Call/Put option in detail-

How to Buy Call/Put Options in Zerodha?

  • Visit Zerodha Kite website and login using the ID/password given in the mail.

Open a browser (Chrome/Internet Explorer/Mozilla Firefox) in your laptop or desktop and enter You will be taken to this page-

Zerodha Option Trading Login

Use the User ID and Password given to you in the password email to login. You will also be required to set answers to 5 questions from a list of 10 questions. Everytime you login, you would need to enter the Kite login credentials alongwith answers to any 2 of these 5 selected questions.

If you are logging in to the platform for the first time then a prompt to reset your password will be made. Choose an easy to remember the password of your choice and login again.

When you login for the first time you will be prompted to take a tour of the platform wherein you will be shown how to access various features and functionality of the platform. You can also get a tour of Zerodha Kite platform later by clicking the top right-hand corner menu.

You can also set your own profile picture in your account page by selecting 'my profile' from the drop-down menu. The picture will also show up on the login page.

  • Add Funds to your account

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

Zerodha Kite Dashboard

You may see a blank dashboard when you login for the first time. As you start trading and do a few transaction, you will start getting data on this page.

You can access the dashboard from any corner of the website by pressing 'A' in your keyboard.

To add funds to your account, click on 'Funds' from the top menu. You will be taken to the 'Funds Page'. It looks like this-

Add Funds To Zerodha Kite

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.

As per SEBI regulations, you need maintain separate balances for Equities and Commodities transactions. Funds in equity accounts can be used for trading in Equity, Equity derivatives, and Currency trading on NSE & BSE. So make sure you select 'Equities' while transferring funds. IMPS transaction are done almost instantly while other modes take time. You can know more about Fund Transfer here.

  • Add desired Options to your market watch
Add Options Contract To Zerodha Kite Marketwatch

To buy a Call or Put Option 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'. It is an important tool and will be useful in every buy/sell of Options. 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.

  • 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
  1. 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

  1. Charts- The charts are used by experienced traders to do technical analysis of the stocks.
  • 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-

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

The order form looks like this-

Buy Call/Put Option Zerodha Kite

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

  • MIS and NRML-MIS stands 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 consist 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.

Fill the order form and click on the blue colored 'Buy' button. On successful completion of the order, you will get a message on your screen-

Buy Option Zerodha Kite
  • 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 a times, there are no sellers available for the price you quoted and hence the order remain 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 on 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?

 Cancel Modify Option Orders Zerodha Kite

Hover your muse 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.

How to sell an Options contract order?

Sell a Call/Put option contract would require you to maintain margin. You can know the margin money required to sell a specific contract using Zerodha's Margin Calculator.

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 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
  1. Alternatively you can also click on '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 qty details.

Read more about Zerodha

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