CNC in Zerodha stands for Cash and Carry, a product type primarily used for delivery-based trading in equity. It allows individuals to buy and hold stocks for more than a single trading day, providing the flexibility to maintain their positions for any desired duration, whether for a few days, months, or even years.
Understanding CNC
When you place an order using the CNC product type on Zerodha, you are indicating your intention to take delivery of the shares. This means you will physically own the shares in your demat account, and they will not be automatically squared off by the broker.
Here are the key characteristics and implications of using CNC:
- Delivery-Based Trading: CNC is specifically designed for trades where you intend to take actual delivery of the shares, meaning you want to own them long-term or for a period extending beyond intraday.
- Overnight Holding: A significant advantage of CNC is the freedom to hold stocks overnight and for any desired duration. This makes it ideal for long-term investments or positional trading strategies.
- No Leverage: Unlike product types designed for intraday trading (like MIS) or futures and options (like NRML), CNC does not provide any leverage. You need to have the full capital required to purchase the shares in your trading account.
- No Auto Square-off: Positions taken with CNC will not be automatically squared off by Zerodha at the end of the trading day. This gives traders full control over when to exit their positions, aligning with their investment horizon.
Why Choose CNC?
Investors and traders typically use CNC for the following reasons:
- Long-Term Investment: If your goal is to invest in a company's stock for the long haul, benefitting from potential capital appreciation and dividends, CNC is the appropriate product type.
- Positional Trading: For those who aim to profit from short-to-medium term price movements that may take several days or weeks to materialize, CNC allows them to hold positions without the pressure of intraday square-offs.
- Avoidance of Margin Calls for Holdings: Since you pay the full amount for the shares, you avoid the risk of margin calls on your holdings as long as you maintain the shares in your demat account.
CNC Key Features at a Glance
To summarize the core aspects of CNC in Zerodha:
| Feature | Description |
|---|---|
| Full Form | Cash and Carry |
| Purpose | Delivery-based trading in equity |
| Holding Period | Can hold stocks overnight for any desired duration |
| Leverage | No provision for leverage |
| Auto Square-off | Positions will not be automatically squared off by Zerodha |
For more detailed information on various product types in Zerodha, you can refer to their support portal.
