There seems to be a “Khelo India Khelo” meme on twitter referring to the upcoming Nifty weekly options announced by NSE. The insinuation is towards the BankNifty weekly options that some market participants see as a gamblers den.
Details of the Nifty weekly options are mentioned in the NSE circular.
There are no changes for the specifications of the option contracts and they follow the same structure as the monthly options. At any point of time, there will be 7 weekly contracts introduced by the exchange. Subsequent contracts will be introduced upon expiration of each contract.
It is interesting that the exchange would go ahead and jump to issue this circular but not issue any timeline or release date with it. Although they do mention that a different circular will intimate the live date, I find it odd that they wouldn’t just mention it at once. Perhaps systems aren’t a go yet?
Our view is that weekly options will bring in additional liquidity in the options marketplace. This was observed in the case with BankNifty weeklies as well. Though there was a reduction in the liquidity of the monthly options of BankNifty, the overall volumes across the expirations increased.
BankNifty weeklies are a a raging success for the exchange and traders alike. They provide cheap leveraged instruments for all sorts of traders who want to trade directional or non-directional strategies. They also provide cheap ways of hedging portfolio risks. Nifty weeklies will provide the same with the broader Nifty index allowing for better trading opportunities as well.
This move by the exchange is a no-brainer.