NSE currency options off to good start, USE lags

Currency options, which made their debut on Indian exchanges on Friday, had a decent run on the National Stock Exchange (NSE), where the turnover touched Rs 1,383.11 crore.

To begin with, NSE is offering currency options in the dollar-rupee pair with three monthly contracts (November, December and January 2011) and one quarterly contract (March 2011).

There are separate put and call options for every month. These options contracts will expire at 12 noon, two working days before the last business day of the expiry month.

The contracts would be settled in cash in rupee, with the settlement price being the Reserve Bank Reference Rate on the date the contracts expire.

On NSE, 234,000 contracts were traded. Almost all volumes were seen in contracts expiring on November 26.

However, on the United Stock Exchange (USE), which also launched dollar-rupee options, there was hardly any trading in these instruments. The exchange recorded just 3,749 contracts with a turnover of Rs 12 lakh.

The currency options launched on NSE and USE are European-style, which means they cannot be exercised during the validity of the contract and are automatically settled on the expiry day. This is in sharp contrast to the American options, which can be squared off even before expiry.