Nifty options liquidity has grown massively, though much of it now sits in very short-term expiries. Over the years, this seems to have quietly changed the structure of the market.
@nithin shared this on X Yesterday
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Upon reading the above,
and after overcoming the initial “aap keh rahe ho, theek hi hogaa…” thoughts,
here are a few questions -
market has structurally shifted from hedging to speculation
What leads us to believe that folks interested in hedging
aren’t simply preferring to use rolling shorter-term expiries?
As weekly Nifty expiries did not exist in 2015.
is the “healthy” long-dated OI profile of 2015…
- …actually a revealed reference for longer tenors?
- …or simply a result of the absence of any alternative?
hedging with NIFTY options has gotten structurally harder
-
If hedgers are already using rolling weeklies by choice,
will cheaper long-dated contracts actually move them?
How much cheaper? -
If hedgers are doing it because long-dated liquidity is thin,
what would be the necessary magnitude of price incentives
to bootstrap sufficient liquidity in the first place?
@nithin
Why do you want to help SEBI get rid of weekly options by bringing up these points?
Previously, it was you who highlighted that people were losing money in options, after which SEBI conducted a comprehensive study of the same. 
Speculation is not the same as gambling if done with risk management.
If nothing is done to fix the lopsided volume concentration in weeklies, then it’s certainly going away in a few years time! 
Incentivizing participation in longer dated options is the better alternative. 