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    Traders take a fancy to weekly options, switch to shorter bets

    Synopsis

    Most of the shifting has happened in strikes that are closest to Nifty’s value.

    ET Bureau
    The newly-launched Nifty weekly options are fast gaining popularity among traders, who are shifting a portion of their bets from contracts that expire every month to these shorter-term options.

    The Nifty weekly contract expiring on Thursday has total put open interest of 1.50 crore shares while total call open interest is of 78 lakh shares, said analysts. The monthly total put open interest has 2.80 crore shares while call open interest has 2.08 crore shares, they said.

    “Some traders would have shifted, 15 per cent of volume is now happening in weekly options, out of total option volumes. A large part of it can be associated with shifting,” said Rohit Srivastava, fund manager-PMS at Sharekhan by BNP Paribas.

    The NSE had launched weekly options on the Nifty index in February.

    Most of the shifting has happened in strikes that are closest to Nifty’s value. In the monthly contract expiring on March 28, the highest call open interest is at 11500 followed by 11000 strike with open interest of 20.91 lakh and 19.05 lakh shares respectively while weekly contract expiring on March 7 has got highest call open interest at11100 strike with open interest of 20.35 lakh shares.

    “The start of weekly expiry in Nifty has given more scope to play the trades by paying limited premium for its weekly for buyer while writing decay benefit for seller. Overall shifting has started in open interest from monthly to weekly contracts,” said Chandan Taparia, derivative analyst at Motilal Oswal.

    The exchange had introduced weekly options contracts on the Bank Nifty index in May 2016.

    “The highest put option strike (in Nifty monthly options) is commanding only 30-35 lakh shares. Before the weekly contracts were launched, the highest strike had open interest of 50-55 lakh shares. The open interest has shifted by around 15-20 lakh shares to weekly contracts from monthly contracts,” said Amit Gupta, head of derivatives at ICICIdirect.

    Gupta said he has not seen new participants coming since Nifty weekly options have been recently launched but shifting from monthly options has surely happened.

    “As it progresses, more participants will come. In Bank Nifty, monthly options were not highly liquid but when weekly Bank Nifty options started, it became highly liquid so that means there was emergence of new participants,” said Gupta. “We believe new participation will also start in Nifty weekly options going forward,” he added.

    The highest put strike of 27000 in the Bank Nifty weekly options has total open interest of nine lakh shares. The highest put strike of 27000 in the monthly Bank Nifty futures expiring on March 28 has 3.7 lakh shares in open interest.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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