Options fever cools as Sebi curbs kick in

Index options traded plunged 30% in week ended 6 December

- Ram Sahgal

The options frenzy among India's retail investors may be beginning to cool as regulatory measures to prevent widespread losses begin to take effect.

During the week ended 6 December, the first under the new regime of just two weekly expiries, the number of index options traded plunged 30% to 2.14 billion contracts, data from the National Stock Exchange (NSE) and BSE showed. That compares with 3.04 billion weekly Nifty and Sensex, and monthly Bank Nifty and Finnifty options traded in the week ended 29 November, when each day saw a contract expire.

Though the number of contracts traded was sharply lower, the premium turnover—or the market value of these options—for the week was marginally higher. The reason: The huge participation in Nifty weekly contracts on 5 December, a day before the monetary policy announcement.

Thanks to this policy-related spike, NSE's premium turnover for the week ended 6 December was 3.4% higher at ₹2.73 trillion, compared with the preceding week's 2.63 trillion.

The data break-up for Sensex options was unavailable.