Options Gather Pace On Nse

Trading in individual stock options seems to be catching up on the National Stock Exchange (NSE).

Two-month August contracts (including those done in July and August, and maturing on the last Thursday of August) attracted huge volumes of 580.44 lakh shares traded, aggregating to a notional volume of Rs 1,099 crore. The premium paid on August stock options rose to Rs 59.27 crore.

Options trading on individual stocks started on the NSE on July 2. Given that exchange regulations require contracts for at least three months to be open at any time, July contracts (ending last Thursday of July) were available for only one month, but August contracts were available for two months.

The increased interest in options trading is evident from growth in volumes from 123.01 lakh shares at a notional value of Rs 210.78 crore in July contracts to volumes of 427.10 lakh shares valued at Rs 844.43 crore in August for August contracts.

This is a clear indication that, slowly and steadily, investors are shifting to options trading on account of the rigidity in the cash rolling settlement regime. Trading volumes under rolling settlement have declined by over 80 per cent in the last two months compared with a peak volume of over Rs 12,000 crore on BSE and NSE in February 2001.

The call options are the most preferred contracts making up 76.8 per cent of the total volume. The investors are preferred to pay higher premium on call options compared to put options. The premium paid on call options for the August contract aggregated to Rs 50.41 crore, while that for the put contract aggregated at only Rs 8.86 crore.

The options for top ten scrips account for over 90 per cent of the volume, value and premium on the NSE.

Satyam Computer seems to be the most speculative option in the ring with contract writers demanding a premium of over 9 per cent on the strike price. The stock attracted huge volumes of 26.83 per cent (155.74 lakh shares changed hands) of the total volume and 23.85 per cent of the total contract of 54,397. The premium paid on Satyam has been 33.58 per cent of the total.