Why are there restrictions on placing Bank Nifty and Nifty option orders for certain strike prices?

All the strike price of Nifty and Banknifty options are allowed for MIS - Intraday trades. However, for overnight (Delivery) trades, certain strikes are restricted from trading due to SEBI regulations that prescribe market-wide Open Interest (OI) limits. Restrictions on Bank Nifty and Nifty option orders for certain strike prices are in place to ensure liquidity, manage risk, and comply with SEBI regulations. While all strikes are allowed for intraday (MIS) trades, overnight (Delivery) trades are subject to restrictions due to SEBI's market-wide Open Interest (OI) limits. As per the new revised circular, SEBI sets an OI cap at 7500 crores or 15% of the total OI for that contract across the market, whichever is higher.

These restrictions help prevent excessive speculation and volatility by limiting the purchase of risky, options contracts. By adhering to these regulations, the market remains more stable and efficient, ultimately benefiting all participants.