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Informist, Monday, May 25, 2026

 

--SEBI moots changes in framework for strike prices of options contracts

--SEBI proposes certain minimum number of in-the-money options contracts

--SEBI proposes certain minimum number of out-of-the-money options contracts

--SEBI mulls leeway to introduce new options strike prices during mkt hours

 

MUMBAI – The Securities and Exchange Board of India has proposed changes to the framework governing strike prices of options contracts across equity and other exchange-traded segments, citing inconvenience faced by option traders when strike prices near the prevailing spot prices are unavailable. This typically happens during intraday volatility, when spot prices move beyond the farthest available strike price.

 

In a consultation paper issued on Monday, SEBI proposed that stock exchanges incorporate a minimum number of in-the-money and out-of-the-money options contracts into their frameworks, where such coverage does not already exist.

 

SEBI said stock exchanges should also be able to introduce new strike prices for options contracts during market hours in line with movements in the underlying asset. However, any strike prices introduced intraday should not require changes to the systems used by brokers or other market participants during live trading, according to SEBI's consultation paper.

 

In the equity derivatives segment of the National Stock Exchange and the BSE, the flow of orders and trading liquidity in options contracts on Nifty 50, Sensex, other indices, and individual stocks tend to move towards contracts with strike prices closest to the underlying price. This is usually due to the convenience factor.

 

Not having a strike price near the underlying price does not hinder the existing positions of options traders or prevent them from opening new option positions at fair premium prices. But SEBI has put forth the view that there should be "predictability and availability of options strikes in case of heightened intraday volatility, for ease of trading in the segment."

 

The SEBI paper also said that exchanges must remove contracts with strike prices that are "far away from the prevailing market price. This, according to a senior equity derivatives analyst at a brokerage, may create problems if the contract has open positions. SEBI has not clarified in the consultation paper whether the removal should take into account existing open positions.

 

SEBI has sought public comments on the proposals in this consultation paper by Jun. 15.  End

 

Reported by Rajesh Gajra

Edited by Saji George Titus

 

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