Initially, When it was launched in the forum of Unofficed, Nearly 200 clients signed up using Zerodha. Now, after running successfully for few months, Zerodha stopped allowing people to sell at deep OTM strike price.

SEBI regulations mandate an upper limit on the OI of each F&O contract at every broker, set at 500 crores or 15% (whichever is higher) of the total OI for that specific contract across the market. As Zerodha has a considerable number of active users trading index options, there are restrictions on buying OTM (Out of the Money) options for specific strikes to maintain OI limits within the allowed ranges.
Previously the selling was not allowed. Later they allowed deep OTM selling.

Around 80 of our clients have been impacted due to execution errors. Given the strategy lacks an inherent buy leg, it’s exposed to unlimited loss if the broker freezes, which has occurred multiple times.

• There are lots of cases when trades are taken with high leverage in the account intraday, the broker had a sudden freeze causing the legs to stay open and causing a 20% loss in a single day in a small account like 1.5L. Now, it used to take 5-6 months again to recover that single loss! 
• Beginning mid-2022, our risk management has been pre-empting such volatility, as broker terminals tend to freeze during volatile events. It significantly de-leverages positions well before major events. Moreover, for smaller accounts with less than 10 Lakh, it entirely liquidates the positions.

A client who suffered a loss and hit an absolute drawdown faces a steep uphill battle to regain capital, often leading to self-intervention.

We employ custom wrappers over the broker’s APIs. While Zerodha charges 2000 and Upstox used to charge 500 (now free), our API endpoints mimic the terminal for quicker order execution.

Despite having a sophisticated multi-API, multi-broker terminal for streamlined risk management, sporadic issues affecting random clients have caused operational disruptions.

Under SEBI’s recent margin model, the practice of selling option spreads while capping risk reintroduces an older leverage framework regarding margin, albeit with associated costs.

Consider a strategy that nets 2L profit with a 50K brokerage in a 2.5L account. In a 10L account, instead of an expected 8L profit, the fixed 50K brokerage significantly magnifies the returns. This setup underscores how the stock market can further strain individuals with lesser capital.

Initially, a 1.5L capital was chosen due to the simultaneous emergence of three startups: Minance, SquareOff, and ReturnWealth, each starting with similar capital.

While Anurag Bhatia of Minance had a reputable trading acumen, his reputation soured when he fell victim to a scam, losing nearly a crore over undelivered unlisted Paytm shares. Anurag, acting as an intermediary, was branded a scamster by the individual awaiting delivery, with his communication lapses leading to Minance’s collapse akin to a house of cards. Earlier, I had invested in Minance for six months, only to exit upon recognizing their technological infrastructure inadequacies.

The individual from SquareOff turned out to be fraudulent, as revealed by a leaked Zerodha 60-day challenge log from mid-2018. The low entry barrier in this field emboldens individuals, lacking basic mathematical skills, to masquerade as fund managers. The operations of ReturnWealth remain unclear.

The scenario was relatively favorable, barring execution errors, thanks to substantial intraday leverage initially. High leverage could rectify a mishap swiftly, but now, it’s akin to a direct fall! Consequently, accounts exceeding 50L capital are prospering.

With a capital of 50L, diversifying it into 10 strategies with a 20K drawdown each allows a maximum 2L drawdown. In the worst-case scenario, if one strategy depletes its 10L, another quadrupling its 10L can offset the loss. Additionally, portfolio volatility can be remarkably reduced by employing long-short strategies—shorting overvalued stocks while going long on undervalued ones, thereby neutralizing the market’s overall directional bias.