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Our Bureau

Mumbai, Aug. 20 Trading in the options segment (both index and stock options) has been on the rise in the Futures and Options (F&O) segment of the equity market in the February to July period, on the NSE.

Analysts feel it’s a safer bet on the option market in a volatile market than taking position in the futures market.

“People want to protect their capital so they prefer options to futures, which they feel less risky,” said a F&O expert.

Nifty futures growth on the NSE has also been impacted due to migration of trade to Singapore Stock Exchange where Nifty futures is listed.

Month-wise index options traded value on the NSE went up sharply by 224 per cent in July as compared with February 2008, a NSE derivative update for July said.

Taking a one-year view, the index options gross traded value for July 2008 was Rs 3,57,209 crore compared with Rs 94,561 crore in July 2007.

Monthly gross traded value of index and stock options in June and July 2008 were close to 30 per cent of the entire F&O segment as compared with around 10 per cent share one-year back in July 2007.

Daily average traded value in index options too have moved up to Rs 15,531 crore in July 2008 as compared with Rs 4,298 crore last year in July.

For the stock options as well there was a rise of 67.7 per cent in the traded value during the above period but stock options traded value showed a decline as compared with July 2007. As compared to Rs 24,985 crore gross traded value for stock options in July 2008, the value was higher at Rs 34,582 crore a year back in July 2007.

According to marketmen, the recent introduction of long-term option by Securities and Exchange Board of India was one of main reasons for the surge in option market trading.

Now options are available with maturity period of up to five years.

“A longer-maturity option makes economic sense because it is a valuable risk management tool for hedgers,” said an F&O analyst based at Chennai.

More Stories on : Stock Markets | Derivatives Markets

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