SL-M Orders for Options to be Discontinued by NSE
As per recent NSE Circular (NSE/FAOP/49677), Stop loss – Market (SL-M) Orders for Index & Stock Options will be discontinued from 27-Sep-21 onwards. Any such orders placed will be Rejected going forward.
This decision of the exchange comes post a series of Freak Trade incidents that have caused investors massive losses. A Freak Trade is an erroneous trade where the price hits an abnormal level for a fraction of a second and then returns to the previous level. The error may happen due to manipulations, human errors, or technical glitches.
Now, you can consider using Stop loss – Limit Orders instead.
The key feature of a Stop loss – Limit order is that it imposes a limit on the price of execution. In case of a Freak Trade incident, this type of order will ensure that your order is not executed at a random price.
For buy limit orders, the order will be executed only at the limit price or a lower one, while for sell limit orders, the order will be executed only at the limit price or a higher one. This allows you to get a better control on your trading prices.
For more on Stop loss Orders, read this.