Recently SEBI approved extending equity derivatives trading to 1155pm from 1oct18. My questions is

- will the underlying be traded also?
- If underlying is not traded, then what will happen to the options realtime charts… will they get skewed and difficult to interpret with technical line studies?

Hi @krish67,

The second question my friend is a million dollar question. I will help answer.

Certainly not. Extended hours are only for derivatives.

In India, underlying of options and futures is the stock. So you are absolutely right, how will the basic black scholes formula work? For that matter how does it work anywhere in the world. Basically, foreign exchanges with extended derivative hours have Option on Futures. Here the options contract have underlying as future.

If they are going to allow Options trading, sth similar has to be figured out. I guess anyway, it will start with Futures only and that too index. Let’s see … But I hope it clears your doubt.

Regards,

Risk.Money

Hi @krish67,

It’s still not clear whether the stock derivatives would be trading or it would just be the indices. Remember, the idea behind the extended hours is hedging portfolios in the event of a big decline in the global markets so essentially what they really need is NIFTY (and probably Bank Nifty) to hedge.

Anyway, time will tell which way this would go.

-Samarth (www.VRDnation.com)

" It’s not clear if extended timings will be for all securities or only for indexes; and if derivatives will trade only till underlying equities trade, he wrote."

if they just trying to fullfill the space of SGX Nifty, index will be traded.

we’ll have to wait for the clarification from NSE, BSE and SEBI for any further.