➡️ Meaning:
It is used in the Derivatives Market (Futures & Options segment).

• MWPL refers to the maximum number of open positions (contracts) allowed in a particular stock’s futures and options combined.

• This limit is decided by SEBI and the stock exchange.

• Normally, MWPL is 20% of the free-float market capitalization of that stock.

• If the utilization of MWPL crosses 95%, the stock is put in the F&O ban list.
  
  

👉 In simple words:
MWPL = The maximum exposure limit allowed (for all market participants combined) in F&O contracts of a particular stock.

➡️ Free float shares are shares that are not linked to the promoter. FIIs, DIIs and the public have all come under public shares.

1. Total & Promoter Holding

• Total Shares (Equity Capital) = 10 crore shares

• Promoter Holding = 6 crore shares

• So, Public Free Float = 10 – 6 = 4 crore shares

2. MWPL Calculation Rule

👉 By SEBI rule:
MWPL = 20% of Free-Float (i.e. Non-promoter) Shares

So here,

• Free-float = 4 crore shares

• 20% of 4 crore = 0.8 crore shares = 80 lakh shares

✅ Therefore, MWPL = 80 lakh shares (which is 8% of total equity capital)

3. Individual Client Position Limit

SEBI ने 2 layers of restriction रखी हैं:

1. Individual Client Limit = Maximum 1% of Total Equity Shares OR 5% of MWPL (whichever is lower).

   • 1% of Total Equity = 10 crore × 1% = 10 lakh shares

   • 5% of MWPL = 80 lakh × 5% = 4 lakh shares
     👉 Lower = 4 lakh shares

✅ So, any single client can hold max 4 lakh shares equivalent in F&O.

4. Trading Member (Broker) Limit

• A broker (including all its clients) cannot hold more than 15% of MWPL.

• 15% of 80 lakh = 12 lakh shares

✅ So, a broker + all its clients together can’t cross 12 lakh shares in that stock.

5. Ban List Rule

• If total open interest > 95% of MWPL, i.e. > 76 lakh shares,
  then the stock goes into F&O ban list until open interest falls below 80% of MWPL.

➡️➡️➡️Trading Rules⬅️⬅️⬅️

1. Midcap Nifty Stocks – OI above 70%

   • When the Open Interest (OI) in a midcap Nifty stock goes above 70% of MWPL, avoid taking any new trades.

   • At this stage, operators can drive the stock in either direction.

   • If you already have any trades, consider closing them.
     
     

2. Midcap Nifty Stocks – OI above 90%

   • When the OI crosses 90% of MWPL, you can buy both Call and Put options (straddle/strangle) that are 5% above and below the current price.

   • This strategy helps to capture sharp moves in either direction.
     
     

3. Legal Operator Definition

   • A “legal operator” can be considered as the participant holding the highest position in that stock’s contracts.
     
     

4. Nifty 50 – Top 20 Large Cap Stocks

   • Only trade in these top 20 stocks if OI is above 10% of MWPL.

   • If in all these top 20 large cap stocks the OI collectively rises above 50%, then it is advisable to reduce or close positions.

   • This is because such conditions often indicate the possibility of a big downward move in the market.