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Why did my Banknifty/Nifty option order get rejected?

We are working on reducing our OI utilisation by moving a few clients to our custodian partner - Orbis Financial. 
Learn how you can migrate your account to trade in out of range Nifty/Bank Nifty options
Rejection: 'Fresh buy orders are not allowed for this strike due to OI restrictions.'

You can place buy orders within a given strike price range in Nifty and Bank Nifty options contracts. The restriction is in place only for new long positions outside the allowed range.

The positions of a trading member are capped at Rs. 500 crores or 15% of the overall market Open Interest (OI), whichever is higher. Since many Zerodha clients actively trade and maintain positions in index options, the allowed trading range is restricted to keep the OI utilisation within sanctioned limits. 

You can check the range available for trading on the Kite order rejection:

Important Points:
  1. You can square-off your existing positions even if the strike price is not within the trading range.
  2. You can take new short positions in contracts outside the trading range. The restriction is only in place for buying options.
  3. If you have an existing short position, you can hedge your trade by buying options without any range restriction. 
  4. If you have an unfilled open order while the trading range gets modified to restrict orders for that strike price, you will not be able to modify your existing order.