Using the Zerodha Kite platform and want to know how to buy futures in Zerodha Kite?
Futures and Options together form Derivatives. Derivatives, in turn, are financial securities that derive their value from underlying assets.
Talking about futures specifically, it is a legal agreement that allows you to buy or sell an underlying security at a future date (on a fixed price).
Both futures and options trading in Zerodha is made available to all its clients through the firm’s trading platforms namely Zerodha Kite, and Zerodha Pi. If you are wondering how to buy futures in Zerodha Kite, stay tuned!
If you are reading this, the odds are that you are either new to Zerodha or futures trading. This article addressed how to do futures trading in Zerodha via the Kite platform in a way that maximizes your financial benefits.
Futures Trading Zerodha
Zerodha Futures are exclusively available for Zerodha clients. This means that one must have a Zerodha Account (a trading one to be more specific) to do futures trading in Zerodha.
The document required for the same are:
Passport size photograph
A canceled cheque
Income Proof – bank statement, latest salary slip (3 months), income tax returns slip (you need to submit/upload any one of these)
Address Proof – driving license, bank statement, electricity bill, any document approved by the govt. Of India
The existing Zerodha users can trade in futures if they had opted for the same while the account opening process. In case the futures trading is not enabled and you wish to trade in futures and options, you may place a request by logging in to Zerodha Console.
This process requires uploading a document for “proof of income”. You may use any one of the following for the same:
Bank account statement (last 6 months)
Latest salary slip
Scanned copy of ITR acknowledgment
Scanned copy of “Form 16” (only for those with salary income)
Net worth certificate
Statement of Demat holdings
Once this process is done, it usually takes about 48 working hours for the F&O segment to be activated on your account.
All these documents must have the concerned authority’s logo. Besides these are only valid for individual account holders. All corporate, HUF, Pvt. ltd account holders must fill in the segment addition form and courier it to Zerodha’s head office along with their income proof.
You can do futures trading in Zerodha via the Zerodha Kite web as well as the Kite Mobile App.
Follow these steps to do the same:
Log in to your Zerodha kite first
If you have already added a future scrip to your watchlist select and open that
In case you wish to trade on a new future (that is not added to the watchlist), search for the same on the “search-box” of your watchlist and add it there. (Zerodha allows having 5 watchlists)
Note that to specifically search for future stocks, simply write the name of the stock, then give a space and type “F”
If you want to “buy” click on the stock from your watchlist and a trading window will appear with both the “buy” and “sell” option.
Make sure you learn about Zerodha Futures Charges in advance to be aware of how much you will be paying off on your trades.
Since we are purchasing, click on “buy”
Now you will find a default price and quantity on the screen. The price denotes the current price of that future stock while the quantity denotes its lot size
Note that you can buy futures according to its given lot size only. This means that if a particular stock shows 1500 in the quantity section as its lot size, you can not buy 1 or 2 shares. You will have to enter the quantity “in multiples” of the lot size. Here, 1500 denotes 1 single lot while 3000 would denote 2 lots
If you wish to hold the share, choose “NRM” as the product type (it denotes delivery trades that can be held for some time)
Now, under the order type segment, you may either select “market” or “limit”
If your order type is market, your trade will be executed on the current market rate
In case you wish to trade on your pre-defined price, select “limit” and enter your desired “limit price”
If you want a regular order, click on “RGLR” from the “variety” segment. (RGLR denotes regular)
Now, select “DAY” under validity
Once you have filled in all the data, click on “buy” and your order shall be placed
You can view, modify and even exit your order by visiting the order book
A few things to note here are that even though placed an “NRML” order i.e. a delivery order that can be held, you are not bound to keep holding it. This means that, if you get a good price on that stock on the very same day, you can exit your position by the end of the trading day. In this way, your order will act as an intraday order.
Moreover, your account must have all the required funds to execute the futures trade under “NRML”. For example, if the quantity is 500 and the price is 200, your account should have ₹1,00,000 (500×200) to buy and hold the shares.
In case you do not have enough funds, place a BO (Bracket Order) under “MIS”. This is because you receive leverage on bracket orders. Therefore you can buy a desired lot size of the futures stock by only paying the “margin amount”.
Since it is a BO, you will also have to set a “stop-loss” and a “target” price. Further, you may also add a Trailing Stop Loss amount.
Also, an important point to remember here is that, unlike equity deliveries, which can be held for any amount of time, the “future deliveries” have an expiry date. In Zerodha this expiry date is on the last Thursday of every month. This means that you can hold future deliveries only until their expiry date.
For this, you will have to select “MIS” as the product type because for “NRML” orders you need to pay the full amount (price x quantity).
As already discussed, you can avail of future stocks in Zerodha by placing bracket orders with MIS as their product type.
The margin required for futures trading in Zerodha is 35% of the “NRML” margin. This means that if you had a lot size of 500 and a price of 200, your “NRML” price to be paid would be ₹1,00,000. Now, since you are trading in the margin amount, you only need to pay 35% of ₹1,00,000 i.e. ₹35,000.