BSE to offer new contracts from today

These new contracts will allow traders to take positions across two different option contracts call and put

The BSE will offer from Monday new specialised contracts, named ‘straddle and paired options’, in its currency derivatives segment.

The new contracts will allow traders to take positions across two different option contracts – call and put – with same underlying asset (such as the rupee-dollar exchange rate) and with the same expiry by entering a single order.

The BSE had earlier made these contracts available in simulation environment for testing, while these were also tested on Saturday.

The ‘paired options’ contracts are specialised two-legged contracts that allow a trader to take positions on two different option contracts belonging to the same product, at the same strike price and expiry.

The paired option contract will comprise one call leg and one put leg. Buying such contract implies taking a buy position in the individual Call option contract and sell position in the individual Put option contract with same strike price and expiry.

The ‘straddle’ contract is a specialised two-legged option contract and comprises two individual legs — the first being the call option leg and the second being the put option leg.

Buying a straddle contract implies taking a buy position in the individual Call option contract and buy position in the individual Put option contract with same strike price and expiry.

The BSE said both these contracts are available on current, near and far monthly as well as quarterly and half yearly option contracts.

The paired option contracts are already available in the BSE's Equity Derivatives segment and now they will also be available in the Currency Derivatives segment.

The straddle contracts will be offered in the Currency Derivatives segment to start with.