USA markets used to have only monthly expiry long ago. Then they added weekly and now they have 3 weekly expiries. SPX has Monday, Wednesday and Friday expiry every week.
Could something like that happen in India with NIfty/BN? As an option seller i would be delighted to have that opportunity. Because after trading for 2 years, i have realized that 80% of my profits have come from Wednesday and Thursday. On the remaining days, I have worked harder, paid more brokerage and taxes and made much less money. And i have significantly reduced my trading activity from Friday-Tuesday.
I think NSE definitely wants to have more expiries, but they keep trying with other indices on tuesday and it never gains any traction. If they really want to give more opprtunities for “hedging” as they claim, then they should keep trying different indices on tuesday until something sticks. But if they want more volume and more profits, they should simply add Nifty/BN expiry on Tuesday as well.
@nithin can you please make this happen somehow. NSE wins, Brokers win, and mostly option sellers also win.
Hmm… options with shorter tenure are infinitely more riskier to the buyer. You can continue to sell only if there are buyers right? I don’t think two expires a week will ever come, and I personally think rightly so.
I’m not saying that these options should be available for only 2 days. They can be available for one month too.
For example, if today is Thursday, option expiring on coming Tuesday, and coming Thursday should both be available.
If it’s Monday, the buyer can choose to trade options expiring tomorrow(Tuesday) or expiring Thursday or monthly expiry.
They have this choice currently as well, right? And if we’re being purely technical then weekly options were also not needed. If there was only monthly options in Nifty BN then they would be extremely liquid too. So if we can go from monthly to weekly, we can add an extra one too.
Moreover, why does usa market have 3 expiries a week? If they can do it, we can do 2 per week definitely.
I’m not being rude. I’m probably missing some major aspect of all this. But somehow i dont think adding an extra expiry will cause all buyers to go bankrupt and volumes will dry up because there will be no buyers.
Weekly options were not needed for sure. While it is good for us as a business and for exchanges, it isn’t really good for option buyers.
They also have payment for order flow (brokers can sell your orders), can lend the client securities without client knowing, can take down client securities in case of bankruptcy, etc. Just because they do, doesn’t mean they are right.
If you look at the trading pattern on weekly options, everyone trades only for that week. No one holds weekly options longer. We are nudging customers towards bad behaviour and I can tell you that weekly options are currently the biggest destroyer of wealth. And this isn’t just for buy options, even for short option folks. Everyone is nudged to trade more, which means more risk and higher costs (trading and impact).
NSE wins, Brokers win, and mostly option sellers also win.
I don’t think two expires a week will ever come, and I personally think rightly so.