Manipulation in Nifty December Put options?

I have been observing a trend which looks like some manipulation is going on in Nifty December 9000 PE and 10000 PE options.

I have some December 9000 PE options purchased at around average price of 70 and 10000 PE options purchased around average price of 100.

However, for the past few days I have been observing that some after-market trading happens and sets the last traded price of these options to a significantly low amount.

E.g. Few days back the DEC 9000 PE option was trading between 60-70 but all of a sudden overnight the LTP of the option got set as 8.90 which is about a 10th of what it was trading for. Due to this the circuit limit of this option got set as 0.05 – 29.90 whereas I imagine people will be willing to buy / sell it for much more than that i.e. around 50-70.

Due to the circuit limit no one can place a sell order above 29.90 so no one is selling these options but I can see a lot of buy interest at the highest possible bid price of 29.90. Of course some of these interested buyers would have bid around maybe 50-70 if they had the option to do it.

I was noticing this for Dec 9000 PE and now the same thing has happened for Nifty Dec 10000 PE as well. It was trading around the 100-rupee range just a day ago at market close. Then when I woke up in the morning, the LTP was showing as 32.75 so I imagine someone traded this option at 32.75 overnight. (Large funds?). Due to the same the 82.85 got set as the upper circuit limit and no one is willing to sell at this price as probably the fair market price of this would be above 100.

There is a lot of buy interest at 82.85 as that is the maximum buyers can bid for although they would probably be willing to buy it for 100 or above if they had the option.

So this makes me wonder why someone who has access to after market hours trading is executing a trade at a much lower price thereby blocking the ability of everyone else for trading these option at fair market value. Is my understanding right or is there some other mechanism at play here?


illiquid stocks/options can be easily manipulated. but the trade happened as per your SC. it shows LTT which is within market hour, not after market hour.
long back ago, i have placed a buy order for just fun at 7.5 in a stock option which was trading around 75 , on 3.28 a trade executed & some sold me that option. it happed due to illiqudity.thankfully i got chance to exit from that on next day.
BTW, you have invested 5k & 7.5K for approx 10 month, may i know how much profit/return you expect from that? i don’t think that it is a wise trade even you get that level, because, if we compare invested amount with time then it isn’t shows a better ROI.

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That is where I have my doubts. I was actively monitoring the trades every day for past few days till market close and I am quite sure no trade happened for that amount during the day and even in the evening it portfolio was showing LTP at the higher price. However when I opened the app in the morning, the significantly lower LTP was shown and the positions were considerably in the red. This happened with both 9000PE and 10000PE options on different days where only when I opened the Kite app in the the morning, the lower LTP was shown while significant loss while till the evening the position was showing positive.

BTW, my current investment is just for learning purpose as I am playing around with a bit of real money to understand the mechanics and get a feel of trading options etc. So nothing planned w.r.t profit / ROI. However in my opinion, stock market is showing many signs of late stages of a bubble (can only be known in hindsight though), I thought of buying far OTM options with long expiry just in case if market was to crash significantly this year, the put options may give good returns. However I am prepared for them to expire worthless if nothing changes.

The point, you raised, which signals some errors.
price shown, may be the settle price, but it won’t be shown LTT. & if it shows LTT then might be some wrong thing is happening.
i like to read what experts @ShubhS9 says about this.

about our second discussion, i agree that, this is a bubble, may bust after euphoria ends. but nobody knows the time.
when the bubble busts, i doubt there may be enough liquidity, otherwise even your right analysis, you may get lower return, so i prefer options in april rather than dec. (but i didn’t checked their prices,so they may not be good to buy). * I sorry for this suggestion but this should be taken as discussion not recommendation.

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there won’t be any after market trading… you can check the last traded time, this options are highly illiquid and trades happen very rarely so traded price and settlement price will vary a lot… one way to check theoritical price is by using black scholes calculator…

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I will keep an eye to see what happens.

Reason I took December puts was to have time on my side. Anyhow just playing around with options to learn for now. I imagine if market goes down both April put and December puts will climb in price.

I think you are right.

So basically some algorithm is re setting these prices overnight or something. But it is a bit off as it ends up distorting the market for these in my opinion due to limits being set at prices far lower then actual demand causing trades to dry up.

No no.
S basically you need to learn about options or derivatives in general.
The link you have posted. It do not talk about algo dude.
Its simple process followed by NSE for each and every instrument traded (even equity)
So real answer is

yes off course, but liquidity maters to get exit.

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