Convert Position in Zerodha Explained

Zerodha offers multiple order types that allow traders to manage trades according to their strategy, risk appetite, and market view. One function that often creates confusion—especially among new traders—is the “Convert Position” feature. Many users search for what is convert position in Zerodha because they see the option inside the Positions tab but are unsure when or why it should be used.

Table of Contents

1. What Does “Convert Position” Mean in Zerodha?
2. Types of Position Conversions in Zerodha
3. When Do You Need to Convert a Position?
4. How to Convert a Position in Zerodha
5. Conversion Charges in Zerodha
6. Benefits & Use Cases of Converting Positions in Zerodha
7. Risks & Considerations While Converting Positions
8. Final Thoughts
9. FAQs

What Does “Convert Position” Mean in Zerodha?

In simple terms, convert position in Zerodha means changing the product type of an open trade, such as converting an intraday position (MIS) into a delivery position (CNC) or vice-versa. This feature becomes relevant when your trading intention changes during market hours, or when you want to avoid an auto square-off at the end of the day.

Understanding how this works is important because conversion affects your margin requirement, brokerage, holding period, and risk exposure. It also determines whether the stock moves to your Demat account, stays intraday, or requires additional funds. This article explains the feature in depth, including how to convert, when it works, when it fails, related charges, risks, and best practices.

Zerodha Product Types — A Quick Primer

Before understanding the convert option, it’s essential to know Zerodha’s three major product types. These determine whether the order is intraday, delivery, or overnight. The conversion feature primarily depends on these distinctions.

MIS (Margin Intraday Square-off)

MIS is used for intraday trading across equity, F&O, commodities, and currency. Positions created using MIS must be closed before the auto square-off window (usually between 3:10 pm and 3:20 pm for equities). MIS offers reduced margins compared to CNC, but only for F&O and commodities—equity intraday leverage is largely restricted as per SEBI rules. MIS orders are squared off the same day if not closed manually.

CNC (Cash and Carry / Delivery)

CNC is used for delivery-based trades in the equity segment. When you use CNC, the shares are actually delivered to your Demat account after T+1 settlement. CNC requires 100% of the trade value upfront because there is no margin funding. CNC positions can be held for days, weeks, or years since they are delivery trades.

NRML (Normal)

NRML is used in F&O and commodity segments for carrying positions overnight. It does not offer intraday-style margins and follows SPAN + Exposure margin rules. You can hold NRML positions until expiry, provided margin requirements are maintained. NRML conversions usually apply to F&O traders who want flexibility between intraday and positional strategies.

These three product types directly determine whether conversion is technically allowed and how much margin is needed to complete the conversion.

Also, read our detailed Zerodha review with a full analysis of charges, features, and more to get the complete details.

How Many Types of Conversion in Zerodha

There are two major conversion flows:

1. MIS → CNC / NRML Conversion

This is the most common conversion used in Zerodha. A trader who initially enters an intraday MIS trade may choose to convert it into CNC (for delivery in equities) or NRML (for overnight positions in derivatives). For example, if you buy 100 shares of Reliance using MIS at ₹2,800 and later want to hold them, a simple convert action can shift it to CNC.

However, this conversion is only possible if sufficient funds exist to meet the CNC/NRML margin requirement. For equities, this typically means full trade value, because delivery requires 100% cash.

2. NRML → MIS Conversion

Traders sometimes convert NRML positions (especially in F&O) to MIS if they plan to exit the same day and want to benefit from lower intraday margin requirements. This works only when intraday margins are lower than NRML margins for the specific contract. Zerodha may restrict certain NRML → MIS conversions based on risk and liquidity.

Special Case: Margin Trading Facility (MTF) → CNC

If you buy shares through MTF, you are using broker-funded capital to purchase delivery shares. These can be converted back to CNC if you want to close the MTF position and take full delivery using your own funds. This requires paying off the funded amount completely. Partial conversion is possible only for quantities for which you can afford full payment.

Understanding these flows helps traders avoid accidental losses, square-offs, or rejections due to a lack of margin.

When Can You Convert (and Limitations)

Zerodha allows conversion only under certain conditions. Each product type has restrictions related to margin, timing, and regulatory rules.

Timing Constraints

Conversions must be done within market hours, ideally before the auto square-off time in intraday trade. For MTF → CNC conversions, you may face additional timing restrictions, as shares may need to be unpledged or funded amounts settled.

Margin Requirement

To convert MIS → CNC, you must have 100% funds for delivery. If the trade value is ₹50,000, you need ₹50,000 fully available in your Zerodha account. If the funds are insufficient, the conversion will fail or partially convert only the quantity you can afford.

Restricted Conversions

Some product types cannot be converted at all. For example:

• Cover Order (CO) positions cannot be converted.
   
• Bracket Order (BO) positions also cannot be converted, since both BO/CO orders include mandatory stop-loss brackets.
   
• Some F&O contracts nearing expiry may restrict NRML → MIS conversion.
   

Conversion in Hedged Positions

If you hold a hedged F&O portfolio, converting one leg may lead to a loss of the combined margin benefit. For example, converting a long option (NRML) to MIS may break the hedge and increase the required margin by 20–40% depending on exposure. Failing to maintain the increased margin can result in auto square-off.

Known System Outages

Zerodha has previously reported position conversion outages due to backend issues or peak load during volatile markets. During such periods, conversion requests may fail, leading to forced square-offs for intraday positions.

Understanding these limitations is essential before relying on conversion as part of your trading strategy.

Want to go beyond order types and understand whether your funds and trades are truly secure? Read the complete breakdown in Is Zerodha safe.

Step-by-Step Guide: How to Convert Position on Zerodha

Zerodha allows conversion on both its Kite app and Kite web platform. The steps are similar but slightly different in navigation.

Using Kite App (Mobile)

1. Go to the bottom menu and tap Portfolio.
2. Select the Positions tab.
3. Choose the position you want to convert.
4. Tap Options and then Convert.
5. Select the desired product type (MIS → CNC/NRML or NRML → MIS).
6. Review margin impact and available quantity.
7. Tap Convert to confirm.

Using Kite Web (Desktop)

1. Log in to Kite Web.
2. Go to Portfolio → Positions.
3. Hover over the position and click the … (Options) button.
4. Select Convert.
5. Choose the product type and quantity.
6. Confirm the conversion.

Converting MTF to CNC

1. Open Console or use the Kite app, depending on interface availability.
2. Navigate to Holdings → MTF Positions.
3. Select the stock and choose Convert to CNC.
4. The system will show the required funds.
5. Add funds if needed, then confirm conversion.
6. If you cannot pay for all shares, partial conversion will apply only to the affordable quantity.

What Happens After Conversion?

Once conversion succeeds, the product type changes immediately in the Positions window. If converting to CNC, the shares will be delivered to your Demat after T+1. For partial conversions, only the quantity meeting margin requirements will shift, leaving the rest in the original product type.

Costs, Charges & Implications in Zerodha

Zerodha does not levy any fees for converting positions. Whether you convert to MIS → CNC or NRML → MIS. The conversion is completely free of charge.

However, other charges may apply depending on the post-conversion product type.

Post-Conversion Charges (Delivery / CNC)

Once a position is converted to CNC, it becomes a delivery trade. Delivery transactions incur:

• Exchange transaction charges
• STT (Securities Transaction Tax)
• SEBI charges
• GST
• Stamp duty

These charges apply whether the shares were originally bought using MIS or CNC.

Auto Square-off vs Conversion

If you do not convert MIS positions by the intraday square-off time, the position may be closed automatically. Auto square-off attracts:

• Square-off penalty (₹50 per order or more, depending on segment)
• Additional intraday brokerage
• Slippage risk due to forced exit

Converting MIS → CNC helps avoid these penalties.

Margin Impact in Hedged Trades

Converting one leg of a hedged F&O position reduces the net margin benefit. After conversion:

• Required margin may increase
• You may need to add funds immediately
• Failure to add margin may lead to RMS square-off

MTF → CNC Unpledge Charges

If converting MTF holdings to CNC, Zerodha charges an unpledge fee (typically ₹15–₹20 + GST per stock). This is separate from conversion and applies only when unpledging occurs.

Knowing these cost implications helps traders make informed decisions when converting.

Benefits & Use Cases of Converting Positions in Zerodha

Conversion is a helpful feature when used strategically. The following are the most common scenarios where traders benefit from converting positions.

1. Avoiding Auto Square-off (MIS → CNC)

If you enter an intraday MIS trade but the stock moves against you or you want to hold the position longer, converting to CNC avoids auto square-off penalties. This is especially helpful for trades where the long-term view remains positive.

2. Transitioning to Long-Term Strategy

Many traders initially trade intraday but choose to convert to CNC if the stock shows potential for long-term appreciation. Converting allows you to carry the stock beyond the trading day and take delivery.

3. Managing Liquidity and Margin (MTF → CNC)

If you have purchased shares using margin funding, converting to CNC later allows you to reduce interest liability by paying the entire amount. This is useful when liquidity improves or additional capital becomes available.

4. Using Conversion for Hedged Strategies

In F&O strategies such as bull spreads or butterflies, converting one leg (e.g., NRML → MIS) helps reduce margin when planning to exit intraday. It optimises capital usage without disturbing the entire strategy.

Knowing when to convert gives traders more flexibility and control.

Risks & Considerations / Things to Watch Out For

While conversion is useful, it also comes with risks and limitations that traders should keep in mind.

Insufficient Margin
Conversion may fail or only partially succeed if you do not have enough funds. For equities, converting 200 shares worth ₹4,500 each requires ₹9,00,000 in free cash. If only ₹5,00,000 is available, only part of the position (approx. 111 shares) may convert.

Impact on P&L Calculations
Post-conversion, Zerodha recalculates your P&L based on product type. For CNC, realised P&L may not reflect immediately, and average price may reset depending on delivery status. This can confuse users tracking intraday profits.

Loss of Hedged Margin Benefit
If you hold a hedged F&O position—such as a long call and short call—converting the long call from NRML → MIS may break the hedge. Removing hedge benefits can increase required margin by 20–40%, depending on strike distance and volatility.

Unpledge Charges (MTF → CNC)
When converting MTF to CNC, shares must be unpledged, and Zerodha charges an unpledge fee. This cost may impact total returns.

Operational Risk
Past Zerodha bulletins have mentioned conversion order failures due to high market volatility or backend issues. During outages, MIS positions may get auto square-off even if conversion was attempted.

Understanding these risks avoids unpleasant surprises during market hours.

Real User Experience & Common Questions (FAQ Style Section)

Below are some real issues traders commonly face regarding the conversion feature.

Is there any charge for converting MIS → CNC?
No, Zerodha does not charge any fee for position conversion. There are no hidden costs. Only regular delivery charges apply if the position becomes CNC.

Can I convert partial quantities?
Yes. If you bought 300 shares but have funds only to convert 150, you can convert just 150 shares. The remaining stay in MIS.

Can I convert NRML to MIS?
Yes, but only if intraday margins are lower. Some NRML contracts may restrict MIS conversion depending on volatility or expiry proximity.

Will converting one leg of a hedge break my margin benefit?
Yes. If you convert one leg of a hedged position, margin requirement increases since the hedge is no longer valid in the same structure.

What happens if my conversion request fails?
If conversion fails due to insufficient funds, system issues, or timing restrictions, the position stays MIS or NRML. For MIS, this may result in auto square-off.

Best Practices & Tips

A few simple rules can help traders use conversion more efficiently and avoid mistakes.

• Ensure sufficient funds before attempting conversion, especially for large equity trades.
• Convert at least 30–45 minutes before the auto square-off time to avoid delay-related failures.
• For F&O hedges, calculate margin impact using Sensibull or Zerodha’s margin calculator before converting.
• Use conversion as part of a strategic shift, not a panic reaction.
• Check Zerodha’s bulletins regularly for any announcements about conversion outages or restrictions.

Following these practices reduces operational and financial risk.

Conclusion

The convert position feature in Zerodha is a simple yet powerful tool that lets traders modify their trade intentions during market hours. It helps users shift from intraday to delivery, adjust F&O margin usage, or transition from MTF to full delivery. While the feature is free and easy to use, it requires attention to margin, timing, and product type restrictions.

Used wisely, conversion helps traders maintain control over positions, reduce penalties, and optimise capital. Before converting, always review margin impact and ensure the conversion aligns with your trading strategy.

FAQs

1. What is the convert position in Zerodha?
Convert position in Zerodha means switching the product type of an open trade—for example, converting MIS (intraday) to CNC (delivery). It allows traders to carry positions overnight or change margin usage.

2. How to convert position in Zerodha?
Go to Portfolio → Positions → Select the trade → Convert → Choose the desired product type → Confirm. Ensure adequate margin before converting.

3. How to convert position to holdings in Zerodha?
To convert to holdings, convert MIS → CNC. After conversion and settlement (T+1 day), shares will appear in your Demat holdings.

4. Are there charges for converting positions?
Zerodha does not charge any fee for position conversion. Only regular delivery charges apply if you convert to CNC.

5. Why does the convert position in Zerodha fail sometimes?
Common reasons include insufficient margin, expiry restrictions, converting restricted order types (CO/BO), or system-related outages.