This is an interesting question and an important one that traders need to be aware of when trading stocks that are a part of the F&O space. When a stock comes under the Ban Period, you are only permitted to close out open positions that you may have on that stock in the F&O segment. You cannot create fresh positions, long or short, in the derivative contracts of those stocks that are under the ban period.

Any fresh positions created on the F&O segment of a stock that is under the ban period will attract a penalty that is equivalent to 1% of the value of increased position subject to a minimum of ₹5,000 and a maximum of ₹1,00,000. Keep in mind that these restrictions are not applicable to cash stocks and to index F&O contracts.

In our FYERS Margin Calculator page, we mention every day the list of stocks that fall under the ban period (if any). Below is the screenshot of our Margin Calculator page, with the region highlighted in red showing the list of securities under ban.

Now, the next question that you might ask is what causes a stock to enter a ban period in the derivatives segment?

Well, a stock enters a ban period when the aggregate open interest, or OI, on that stock across all F&O contracts crosses 95% of the Market Wide Position limit, or MWPL. It remains in the ban period so long as the aggregate OI is above 80% of MWPL. Once the aggregate OI falls below 80% of MWPL, the ban is lifted and normal trading is resumed on the stock.

What is meant by ban period for Stock F&O?