What is CNC?

A financial arbitrage method involving leveraging the mispricing between an underlying asset and the financial derivative corresponding to it is known as cash and carry arbitrage.

A trader who employs the cash and carry arbitrage technique tries to profit from market pricing differences between the underlying(s) and the derivative by taking advantage of the chance to profit from a correction in the mispricing. Basis trading is a term used to describe the technique.

What is CNC in Zerodha?

Cash and Carry (CNC) are product codes that must be entered into Zerodha Kite or Pi every time you place an order. For delivery-based stock trading, Cash and Carry (CNC) are used.

Users will not gain any advantage or have their position automatically squared off if they use CNC product code. They won’t be able to sell with the CNC product code until you have the stock in your DEMAT account.

CNC is merely a product code. It will still be deemed an intraday trade if they utilize CNC to purchase and sell a stock on the same day.

If you’re interested to open your DEMAT Account with Zerodha, here is the Direct Account opening link

CNC Usage Rules in Zerodha

Cash and Carry are abbreviated as CNC. It’s a form of order that’s used for orders that require delivery. 

  • Users should choose the CNC order type if they wish to buy a stock and keep it for more than two days.
  • Zerodha offers brokerage-free delivery trading, which implies that no brokerage is charged on CNC orders.
  • CNC is a product code, so one needs to keep that in mind. If they want, they can sell the shares the same day with the use of a CNC code. However, the sell quantity cannot exceed the buy quantity. If they sell the shares on the same day, there is no penalty.
  • These trades will be treated as Intraday trading in such instances, and the brokerage applicable to Equity Intraday trades will be applied.
  • Users do not gain any leverage or have their position automatically squared off when using CNC product code.
     
  • Unless they buy and sell on the same day, they can not sell using the product code CNC unless they have the stock in their DEMAT account.

NRML or CNC 

One does not gain the benefit of additional leverage if you place an NRML or CNC order. The NRML option allows users to take overnight positions in F&O. CNC can also be used to accept delivery deals in the cash segment.

Shares will be supplied to the user’s Demat account once purchased, and shares will be debited from their Demat account if sold.

In Zerodha, how long is a CNC order valid?

The validity of a CNC order in Zerodha is determined by the validity order type selected at the time of placement.

  • If you use a Day order to place a CNC order, the order is valid until it is executed or until the conclusion of the trading day, whichever comes first.
  • If you use an IOC order to place a CNC order, the order is instantly canceled if it is not completed. 

In most cases, IOC orders are used to place orders in large volumes.

For how long can users hold CNC?

If users choose CNC, they will be able to keep it for a long time. If it says T+1 in their holdings, that means the shares you bought on CNC will take T+2 days to arrive in their Demat account.

Hence, if they choose CNC, they can hold it for a long time.