Stock Markets

Bank Nifty weekly options specifications

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As per the recent NSE Circular, we hope you are aware that NSE is launching weekly options contracts on Nifty Bank (Bank Nifty). NSE wants to use Bank Nifty which is the second highest traded instrument on the exchange to improve the liquidity and volumes. These weekly contracts will be listed with effect from 27th May 2016. The monthly options contracts will continue to exist as usual.

Key features of Nifty Bank (Bank Nifty) weekly options:

• There will be 7 weekly expiries in addition to the existing 3 monthly weekly option contracts.
• Symbol, strike price and lot size will be the same as monthly contracts.
• Contract size will be 30 units for all expiries for June 2016 and 40 units for all expiries from the July 2016 onwards.
• Weekly contracts shall expire every Thursday of the week.
• All the 12 components of Bank Nifty have derivatives on them.

The following weekly options expiries would be available from 27th May 2016.

bank nifty weekly expiries

According to NSE, the benefits of trading weekly contracts are:
• Low cost hedging: Weekly options can be used effectively for short-term portfolio protection as they tend to be cheaper in comparison to monthly contracts.
• Flexibility: Weekly options offer more flexibility to hedge ahead of economic data releases, RBI announcements, economic events etc.
• New trading cycle: gives more number of option trading opportunities.

Trading volumes of bank nifty options have grown at 190% CAGR in the last 5 years since 2010!

NIFTY BANK options growth

In comparison, Nifty Bank (Bank Nifty) grew much lesser as shown below.

NIFTY BANK futures growth

About Nifty Bank (Bank Nifty) Index:

Bank Nifty Index has 12 most liquid and large capitalized stocks from the banking sector and represents 93% of the free float market capitalization of the banking sector universe. The index consists of both private and nationalised banks. Eight stocks of Bank Nifty are part of Nifty 50.

The component stocks are:
1. HDFC Bank
2. ICICI Bank
3. Axis Bank
4. Kotak Mahindra Bank
5. State Bank of India
6. IndusInd Bank
7. Yes Bank
8. Bank of Baroda
9. Federal Bank
10. Punjab National Bank
11. Canara Bank
12. Bank of India

This list is as of 26th May 2016.

Refer to these circulars for more information: 32329 & 32338.

What this development could mean:

• Spreads could get narrower in the near month contracts.
• The action may shift into weekly contracts from monthly contracts.
• The premiums will become cheaper.
• If it succeeds, we could see options being introduced for other indices too.

Tejas Khoday

Tejas Khoday

Tejas is the Co-Founder & CEO at FYERS, the youngest team to get NSE’s broker license. He has a specialization in finance and has over 10 years of work experience spanning across proprietary trading, risk management, and broking. Tejas & his team started FYERS, a technology-focused brokerage as a mission to transform the trading/investment landscape in India.

18 Comments

  • Avatar Ranjit Saho says:

    Can I add all bank nifty weekly contracts in the watchlist by default?

  • Avatar Shashidharb12 says:

    Like the way Fyers Web shows options just by typing casually in search.

  • Avatar Trader Ravi says:

    Is it better to trade weekly options or monthly according to you?

    • Tejas Khoday Tejas Khoday says:

      We don’t recommend that. It depends.. observe volumes, premium, volatility and make the wise decision.

  • Avatar Ravish says:

    Tejas, FYERS is not sending SMS for bank nifty weekly expiry. If you can send it will be good reminder to avoid STT.

    • Tejas Khoday Tejas Khoday says:

      Hi Ravish, we don’t send SMS alerts as too many alerts are generally not desirable by users. Maintaining balance.

  • Avatar Joshi says:

    Go big or go home with Bank Nifty options.. Especially weekly contracts. But your technical analysis features on your trading platform Fyers One and Mobile will definitely make things better.

    • Tejas Khoday Tejas Khoday says:

      The weekly contracts sure are more dicey due to short time frame! Timing is real crucial.. Glad you like our platforms Joshi

  • Avatar SidJodh says:

    Wonder why NSE is doing this though.. Any insights?

    • Tejas Khoday Tejas Khoday says:

      To encourage hedgers to hedge with shorter term instruments. The premium amount is lesser and will also promote more transactions. Since banking stocks are news sensitive, the weekly contracts are apt to hedge in the very short-term. Also, bank nifty options contracts are rapidly growing so it made sense for them to launch weekly contracts in Bank Nifty to begin with. If it succeeds, we may see them coming up in Nifty and other indices too.

  • Avatar John Nakkeeran says:

    Sir,

    I asked in general not form your app how to find that the script should be for buy or sell then strike price selection also terms like bete, gama, then straddle, butterfly these are what and where it used can you explain

  • Avatar Nihal says:

    Good article sir

  • Avatar S John Nakkeeran says:

    Sir,
    I am doing the trading in options without knowing the basics i have seen your blogs something interesting but i couldnot understand where i can get the very basic how to select scripts and how to fix the strike price if it is in trouble how to know these are the thing i want to know where i will get the stuff kindly help me.

    Now i am happy to trade in your Fyers why because i am saving lot of money thanks for that. also your platform is good having lot of stuff only thing usage is very important

    John

  • Avatar Anil Raichand says:

    Can someone tell me why only Bank Nifty was chosen for weekly contracts or why weekly contracts were introduced at all? Also more details on how it will work.

    • Tejas Khoday Tejas Khoday says:

      Anil, how it will work is explained above. It was introduced to keep volumes alive in Bank Nifty and if successful
      they will most likely launch weekly contracts in Nifty too. Of course, these are just our assumptions.
      Weekly contracts are about making a liquid product more liquid.

  • Avatar PK Mohanty says:

    This is my first tour of Fyers web site .Quite interesting under young hands .
    What developments you are going to make in your technical support for Bank Nifty weekly,to benefit the Account Holders .

    • Tejas Khoday Tejas Khoday says:

      Hi, thanks! The weekly contracts just launched today. You can trade them on our platforms. Will need to wait and see things work out.

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