How to enable nudges and the F&O kill switch on Zerodha

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Zerodha’s nudge system and the F&O kill switch are two related investor protection features that address the documented risk of retail traders losing money in the derivatives (futures and options) segment. Kite nudges are real-time behavioural warnings that appear at the order ticket level when a specific order meets a risk criterion. The F&O kill switch is a more drastic opt-out tool that disables the ability to open new derivative positions entirely. Both features were developed partly in response to SEBI directives on investor protection in the F&O segment. This guide explains how each feature works and how to use them.

Background, why these features exist

SEBI published data in 2024 showing that over 90% of individual F&O traders incurred losses over a three-year study period. In response, SEBI issued circulars requiring brokers to implement risk disclosures, nudges at the point of order entry and tools for traders to self-limit their derivatives exposure. Zerodha implemented the nudge system (built on its open-source SmartAPI framework) and the kill switch in alignment with these regulatory requirements.

These features do not restrict trading entirely; they add friction and awareness at specific risk points. SEBI’s intention is that traders who receive a nudge will pause, re-evaluate and make a more informed decision, rather than mechanically clicking through high-risk orders.

Understanding nudges

Nudges appear automatically within the Kite order ticket flow when certain conditions are met. You do not need to enable nudges manually, they are on by default for all users who trade in the F&O segment.

When do nudges appear?

Nudges are triggered by conditions including:

  • Selling naked options (writing uncovered calls or puts): High risk of unlimited losses.
  • Buying far out-of-the-money options close to expiry: High probability of 100% loss.
  • Placing an order that would result in a position much larger than typical for your account size.
  • Trading patterns consistent with loss-making retail behaviour (as assessed by Zerodha’s risk engine based on your trading history).
  • First-time F&O order or first order in a specific strategy type.

What does a nudge look like?

When a nudge is triggered, a panel appears between the order form and the Submit button. The nudge typically shows:

  • A headline risk message (for example, “9 out of 10 traders lose money selling naked options”).
  • A brief explanation of the risk specific to the order type.
  • A link to a Varsity module or support article with more information.
  • Two options: Proceed anyway and I want to reconsider.

Clicking Proceed anyway submits the order normally. Clicking I want to reconsider closes the nudge and returns you to the order form, allowing you to change parameters or cancel.

The nudge does not prevent trading; it inserts a mandatory pause and a confirmation step. A trader who consistently clicks through nudges may receive stronger warnings or be flagged for review by Zerodha’s risk team.

Step-by-step procedure, activating the F&O kill switch

The F&O kill switch is a self-imposed trading restriction that prevents you from opening new F&O positions. Existing positions can still be closed after the kill switch is activated. The kill switch is intended for traders who recognise they are in a destructive trading pattern and want to stop before discipline can be restored.

Log in to Kite

Open kite.zerodha.com or the Kite mobile app and sign in.

On Kite web: Click your profile icon or your name/client ID at the top right of the screen. A dropdown appears; select Profile or Settings. In the settings screen, scroll down to find the section labelled F&O kill switch, Derivatives trading or F&O activation.

On the Kite mobile app: Tap the profile icon at the top right or the hamburger menu. Tap Profile or Settings.

The exact location of the kill switch setting may vary between Kite versions; if you cannot find it, access it through Console instead (console.zerodha.com > Account > Settings).

Toggle the kill switch off

Locate the F&O kill switch toggle. Its current state is On (F&O trading enabled). Toggle it to Off (F&O trading disabled). A confirmation dialog appears.

Confirm the kill switch activation

Kite requires you to confirm the kill switch activation with your account password or TOTP. Enter the required credential and click Confirm or Disable. Kite confirms that F&O trading has been disabled on your account.

From this point, any attempt to open a new F&O buy or sell order will be rejected with a message indicating that F&O trading is disabled on the account. Closing existing open F&O positions remains possible, this is intentional so that you are not trapped in positions you cannot exit.

Re-enabling F&O trading after the kill switch

Re-enabling is not a self-service action. You must contact Zerodha support (via the support portal at support.zerodha.com or the in-app chat) and request F&O re-activation. Zerodha may impose a waiting period before reactivating, designed to reinforce the pause. This friction is intentional: the kill switch is meant to have meaningful consequences, not be casually toggled.

What can go wrong

  • Nudge appears for every order, slowing down execution. Nudges are designed to add friction for specific high-risk orders, not every order. If you are receiving nudges on routine orders (such as standard expiry ITM option exits), this may indicate a risk profile flag on your account. Contact Zerodha support for review.
  • Kill switch does not appear in settings. If you do not see the kill switch in Kite settings, check Console’s account settings page, or contact Zerodha support to activate it on your behalf.
  • Existing open positions cannot be closed after kill switch. This should not occur, kill switch blocks new position creation but permits closing existing positions. If you encounter this, contact Zerodha support immediately.

References

  1. Zerodha Support, F&O kill switch, how to disable F&O trading, support.zerodha.com.
  2. Zerodha Blog, Nudges on Kite, why we built them, zerodha.com/z-connect.
  3. SEBI, Circular on measures to strengthen investor protection in derivatives segment, SEBI/HO/OIAE/OIAE_IAD-3/P/CIR/2024, sebi.gov.in.
  4. SEBI, Study on loss-making retail traders in F&O segment, sebi.gov.in.
  5. NSE India, Investor awareness on F&O segment risks, nseindia.com.

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WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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