A regulatory restriction placed on a stock's derivatives contracts when open interest crosses a defined threshold of market-wide position limits.
An F&O ban is a temporary restriction imposed by exchanges when the open interest in a stock’s futures and options contracts crosses 95% of the market-wide position limit set by SEBI. While a stock is in the ban period, traders can only close out existing positions, not create new ones, until open interest falls back below 80% of the limit. It’s a signal that a stock has unusually high derivatives activity, often accompanying heightened volatility.
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