At Groww, we want every trader — beginner or experienced — to place orders with confidence. Options trading can be exciting, but not all option contracts behave the same way. Some contracts hardly trade, have very wide price gaps, and can react unpredictably.

To make sure you always get a fair deal, we’re introducing new protections for illiquid option contracts, powered by Groww’s Fair Market Value (FMV) model.

What Are Illiquid Contracts?An option contract is considered illiquid when there isn’t enough active buying and selling happening.
You’ll usually notice this when the bid price (buyers’ quote) and ask price (sellers’ quote) are very far apart.
This difference is called the bid–ask spread.
To measure how large it is, we look at the Relative Spread:

Relative Spread = (Ask – Bid) / ((Ask + Bid) / 2)

If this number is greater than 20%, the contract is flagged as illiquid.Why does this matter?
Because with such a wide spread:

The true market price becomes unclear
Execution can happen at prices very different from what users expect
A few trades can move prices sharply since activity is low

In short — it becomes risky to place market orders.
Why We Disabled Market Orders on Illiquid ContractsA market order means “buy or sell at the best price available right now.”
But if the contract is illiquid, the “best available price” might be far away from a price you consider fair.
This can lead to:

Unexpected execution prices
High slippage
Poor trading outcomes, especially for new traders

To prevent this, Groww now disables market orders on illiquid contracts.

You can still trade these contracts using limit orders, where you set the maximum (or minimum) price you’re willing to accept.

This puts more control in your hands.How We Make Trading Safer — Fair Market Value (FMV)Illiquid contracts can also be easily manipulated — a couple of trades at artificial prices can distort the LTP (last traded price).

To protect users from this, we no longer rely on LTP for these contracts.
Instead, Groww uses a proprietary, model-driven Fair Market Value (FMV).FMV is computed using:

Live bid and ask prices
Mid-price averages
Put–call parity
Synthetic future value
Interpolated price curves across nearby contracts

This results in a stable, reliable fair price — even when the contract itself hardly trades.

Trading Within a Fair Price RangeFor every illiquid contract, you’ll now see a GMV-based price band — a narrow range around the Fair Market Value.
You can place limit orders only within this allowed range, ensuring:

Your price is reasonable
The trade is aligned with actual market behavior
You are protected from extreme or manipulated quotes

This keeps trading fair for everyone on the platform.
Our CommitmentThese changes are designed to help users trade with clarity, fairness, and confidence — especially in segments where market liquidity is low and risks are higher.
We remain committed to building India’s most transparent and user-first trading platform, and FMV-based protection is another step in that direction.If you have questions or feedback, we’re always listening. Happy and safe trading!