Quarterly Bank Nifty contracts to give more options

Mumbai: The introduction of quarterly options contracts on the Bank Nifty will help institutional investors and HNIs take a medium-term bet on the banking index than the currently available weekly and monthly Bank Nifty options contracts.However, Bank Nifty weekly options contracts form over 60 per cent of the overall Bank Nifty options volume given the low cost and shorter time duration.“It will help from a results point of view to bet on the coming quarter results. Initially, liquidity in the quarterly Bank Nifty options will come from institutional and HNI,” said Rajesh Palviya, head - technicals and derivatives at Axis Securities.Investors can also bet on the quarterly Bank Nifty options to play on the bi-monthly RBI policy, said Palviya.The NSE will launch quarterly options contracts on the Bank Nifty with effect from October 30, the exchange said on Monday. The NSE said there will be three quarterly expiries (March, June, September and December cycle) within the maximum maturity of 12 months, said NSE. This is in addition to existing 7 weekly and 3 monthly options contracts on Bank Nifty index, said NSE.The applicable strike interval will be 1000 and the lot size will be 25, the exchange said. Chandan Taparia, derivatives analyst at Motilal Oswal, said these quarterly contracts will not get more popular than weekly options. “HNIs and FIIs can use this as a hedge to customise long-dated views,” said Taparia.The exchange had introduced weekly options contracts on the Bank Nifty index in May 2016 which quickly got more popular than the monthly Bank Nifty options.Rajesh Baheti, managing director at Crosseas Capital Services, said the quarterly contracts may help create structured products on the same for a one-year period because the option values would be available.“Structured or negotiated deals can be passed through the system that way. Weekly will remain popular along with the monthly... it gives a pricing parameter and it helps when people want to negotiate long-term deals,” said Baheti.

from Economic Times https://ift.tt/2SxtxCV