The National Stock Exchange on Tuesday said it had received the Securities and Exchange Board of India's approval to launch weekly options on Nifty 50 index. This move will provide a hedging tool to market participants to manage their portfolio risk more effectively.
The NSE said it was evaluating readiness of market participants for the product launch, for which it will announce a date shortly.
With the successful launch of weekly options on the Nifty bank index, there was demand from the market participants for a similar product variant of the Nifty 50 index. The weekly options on Nifty 50 index provides an additional hedging tool for market participants to manage the portfolio risk more effectively.Vikram Limaye, Managing Director and Chief Executive Officer, NSE.
The Nifty 50 weekly options will have seven consecutive weekly expiry contracts (excluding the week where monthly contracts expire).
On expiry of a weekly contract, the exchange will introduce next weekly contract on rolling basis. The existing three monthly options contracts, three quarterly and eight semi-annual option contracts will continue to be available.
The contracts will expire on Thursday of every week. In case Thursday is a trading holiday, the previous trading day will be the expiry or the last trading day.
The NSE recently launched weekly options in the currency derivatives segment on the dollar-rupee currency pair, while in 2016, the exchange had launched weekly options in the equity derivatives segment on the Nifty Bank index.
As per the bourse, both product variants have seen widespread acceptance among market participants.
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