• HDFC securities
• 14 Nov 2025
• Knowledge Centre

Have you ever placed a market order in the options segment only to see it execute at a price significantly worse than what you expected? That sudden, unfavourable difference is called slippage, and it can aggressively eat into your trading profits, especially in fast-moving or illiquid option contracts.
To counter this risk and enhance trading safety, we based on exchange guidelines have implemented Market Price Protection (MPP). This is an essential, automatic risk-control mechanism designed to shield your market orders from extreme price fluctuations.

 

What Exactly is Market Price Protection (MPP)?
MPP acts as an immediate safeguard that appears on the order window when you place a market order for an option contract.
 

How MPP works?
Market protection executes your orders immediately at the best available price while reducing the risk of price variation. Unlike a regular market order that can be filled at any price, market protection converts your market order into a Limit Order if the price moves outside a set protection range. This helps you avoid execution at a price that differs greatly from your intended price, offering protection against extreme price fluctuations.
Specifically for options, when a user places a market order (Buying & Selling both), the system converts it into a limit order with a price buffer above the LTP (Last Traded Price).

 

Default MPP percentages for Option contracts:

Index Options = 10% of LTP or 20 Rupees Minimum

Stock Options = 20% of LTP or 5 Rupees Minimum

 

 

Let’s look at an example:

If the option’s LTP is ₹500 and the MPP is set at 10%, the system will place the order as a limit order at ₹550. It will still execute at the best available market price below ₹550 if available. If the next available bid is out of this limit due to illiquidity, order will be pending, which user can modify later.

 

This mechanism is especially useful for illiquid option contracts, where market orders could otherwise get executed at abnormally high prices. It ensures that the order won't go through above the defined protection range.