Why NSE Doesn’t Provide Weekly Contracts Of Stock Options, I Mean Weekly Contracts Attracts Better Liquidity Into System & More Control On Positions…
& BSE Have It I Think But Brokers Doesn’t Allow It
There are a few reasons why the NSE does not provide weekly contracts of stock options.
Liquidity: One reason is that weekly contracts are less liquid than monthly contracts. This is because there are fewer traders who are willing to trade weekly contracts, and the bid-ask spreads are wider. This can make it difficult for traders to enter and exit positions, and it can also lead to higher trading costs.
Regulation: Another reason is that the NSE is subject to stricter regulations than the BSE. The NSE is required to have a minimum number of bids and asks for each contract in order to trade. This requirement is designed to protect investors from price manipulation and other market abuses. Weekly contracts are more likely to fail to meet this requirement, which is why the NSE does not trade them.
Risk: Weekly contracts are also considered to be riskier than monthly contracts. This is because weekly contracts are more sensitive to changes in the underlying stock price. This can make it more difficult for traders to manage their risk, and it can also lead to larger losses.
Trading Infrastructure: Finally, the NSE’s trading infrastructure is not designed to support weekly contracts. The NSE’s trading system is designed to handle monthly contracts, and it would require significant modifications to support weekly contracts.
Overall, the NSE does not provide weekly contracts of stock options because they are less liquid, more regulated, riskier, and require significant changes to the trading infrastructure.
As for why brokers do not allow trading of weekly contracts on the BSE, it is likely due to the reasons mentioned above. Brokers may not want to offer weekly contracts if they are not liquid or if they are considered to be risky. Additionally, brokers may not want to invest in the infrastructure required to support weekly contracts if there is not enough demand for them.
This information is fully given by ChatGPT-4 (OpenAI).