Introductory Context
"This topic covers the complete square-off workflow: when to exit (connecting to the stop-loss, profit target, and time-based rules from Module 08), how to structure the exit order (order type, price, timing), and what to verify after the exit to confirm the position is fully closed and the P&L is correctly recorded. "
The Three Exit Triggers - Connecting Module 08 to Execution
Every options position should be exited when one of three analytically-defined conditions is met. Exit Trigger 1 -- Stop Loss: the underlying has reached the defined chart-based stop level (daily close below the support level that defined the entry) or the option premium has reached the defined premium stop level (the GTT trigger price). For GTT-triggered exits: the exit order is placed automatically. No manual action is required if the GTT is active and correctly set. For chart-based stops requiring monitoring: when the underlying closes below the chart stop level, open the broker platform and place a manual sell order for the full position quantity at the current LTP as the limit price.
Exit Trigger 2 -- Profit Target: the underlying has reached the technical target identified in Step 6 of the pre-trade checklist, or the option premium has increased to the 50 to 80 percent profit trigger from Topic 8.10. For profit exits: there is no GTT equivalent -- profit exits require a manual sell order (or a pre-placed limit sell order at the target premium level) from the Positions tab or Market Watch.
Exit Trigger 3 -- Time-Based Exit (Theta Stop): the conditions from Topic 8.9 have been met -- the option premium has declined to 50 percent of the entry without meaningful directional progress, or the remaining time is insufficient for the expected move given the current ATR. Time-based exits require manual monitoring and manual execution.
Pre-Placing Limit Sell Orders for Profit Targets
For profit targets, you can pre-place a limit sell order at the target premium level before the position reaches the target. From the Market Watch, click Sell on the option contract. Enter: Qty = full position units, Order Type = Limit, Price = target premium level (e.g., Rs 145 if the target is a 60 percent gain from Rs 90 entry), Product = NRML. This limit sell order will execute automatically when any buyer agrees to buy at Rs 145 or above -- you do not need to monitor continuously. The order remains pending in the Orders tab until filled or cancelled. This pre-placed limit sell is the profit-target equivalent of the GTT stop-loss order.
How to Execute a Manual Square-Off Order
From the Positions tab in Kite: locate the position to be closed. Click the position row to highlight it, or click the Exit button (if displayed). Alternatively, from the Market Watch, click Sell on the same contract. The order form opens pre-populated with the position details. Verify: (1) Qty matches the full position units (for a complete exit) or the partial exit quantity (for a 50 percent partial profit exit). (2) Order Type: Limit is the correct choice for most exits (see Topic 10.9 on why market orders should be avoided for options). (3) Price: set at the current bid price or slightly above (for sell orders, the bid is what buyers will pay). (4) Product: NRML (should be pre-populated from the existing position). Click Sell.
The sell order appears in the Orders tab as Pending until a buyer accepts your price. For liquid Nifty ATM options with tight spreads, the order typically fills within seconds at the bid price. For less liquid options, the order may remain pending if no buyer accepts the limit price. If not filled within thirty seconds: check whether the LTP has moved below your limit price (the market has moved against you during the order's pending period). Modify the limit price to the current bid.
Square-Off Order Checklist
Before clicking Sell (for a long position exit): (1) Qty: correct number of units for the exit (full or partial). (2) Order Type: Limit (preferred). (3) Price: current bid or slightly above bid for immediate fill. (4) Product: NRML (for overnight-held positions). (5) Direction: Sell (not Buy). After execution: (6) Verify position is removed from Positions tab (full exit) or quantity is reduced (partial exit). (7) Check Orders tab confirms Executed status with the fill price and timestamp. (8) Record the exit in the Traders Diary within 30 minutes: exit price, exit reason (stop/target/theta stop/partial profit), actual P&L vs planned P&L.
Partial Square-Off - Taking 50 Percent Profit
The 50 percent partial profit exit from Topic 8.10 requires selling exactly half the position. From the Positions tab, click Exit (or Sell) on the position. In the order form: change the Qty to exactly half the current quantity (for 150-unit position: enter 75 in the Qty field). Verify all other fields as above. Click Sell.
After the partial fill, the Positions tab shows the remaining 75-unit position with the same Avg. Price as before (the average price does not change from a partial exit -- it only changes when additional buying occurs at a different price). Update the GTT stop for the remaining position: the stop should now be at the break-even level (the original entry premium, e.g., Rs 90) rather than the 50 percent stop (Rs 45). Cancel the existing GTT at Rs 45 and create a new GTT at Rs 90 for the 75-unit remaining position.
Verify the Position Is Fully Closed -- The Incomplete Exit Risk
After placing a square-off order, verify that the full position quantity was closed by checking the Positions tab. If the order was placed for fewer units than the full position (an entry error in the Qty field), the remaining units will still appear in the Positions tab as an open position -- potentially without a stop-loss order. The most common incomplete exit: placing a sell order for 75 units of a 150-unit position thinking you are doing a partial exit, but actually intending to close the full position. After every exit order, explicitly count the Positions tab entries and verify the expected result.
Square-Off Timing - When the Exit Order Is Placed Matters
For stop-loss exits: execute immediately when the trigger is reached (GTT handles this automatically). Do not delay to 'see if it recovers' -- the stop-loss discipline from Module 08 requires immediate execution. For profit targets: execute when the target premium level is reached. Pre-placed limit sell orders at the target level handle this automatically. For time-based exits: execute during the normal session (9:30 AM to 3:00 PM) rather than in the final thirty minutes (3:00 to 3:30 PM) where spreads may widen and fills may be at worse prices. The final session hour is also the period when auto square-off occurs for MIS positions -- adding to order flow and potentially widening spreads for all options.
Squaring off a position at the right time and the right price is the final act of risk management for that trade. The analytical work determined the entry. The structural discipline enforced the stop and defined the target. The execution discipline ensures the exit happens at the intended price with the intended quantity. Every element must be correct.
Use 'Exit All' Cautiously -- Verify Before Clicking
Some broker platforms offer an 'Exit All' button that closes all open positions simultaneously. While convenient in emergency situations (severe adverse market move, broker platform issue), it should not be used for routine single-position exits because it exits all positions -- including those that should be held -- at market prices. In Kite, individual position exits (Qty-specific, limit-priced) are always preferable to Exit All for routine management. Reserve Exit All for genuine emergency scenarios where rapid complete portfolio liquidation is required.