Sebi Has Few & #8216;Options & #8217; For Favoured Scrips

Market favourites Global Tele-Systems, Himachal Futuristic, DSQ Software, Pentamedia Graphics, NIIT, Silverline Technologies, SSI and Zee Telefilms will probably not be eligible for options trading as these scrips fail the Sebi volatility criteria.

The Sebi criteria for stocks eligible for options trading states that the ratio of daily volatility of stock vis-a-vis daily volatility of the underlying index should not be more than 4, at any time during the previous six months. This condition is aimed at keeping out exceptionally fizzy scrips out of options trading.

Based on this condition, only five ICE sector scrips make it to the tentative final list worked out by the Business Standard Research Bureau: Infosys Technologies, Digital Equipment, Satyam Computer, MTNL and VSNL.

The other eligibility criteria requires that company promoters ("founders") should not own more than 70 per cent of the equity holding. This condition eliminates Wipro and HCL Technologies.

Wipro promoter Azim Premji has around 87 per cent in the company, whereas the promoters of HCL Technologies--Shiv Nadar, Rajendra Pawar and Vijay Thadani--have around 73 per cent.

The second condition is that the stock's average market capitalisation should figure among the top 200, with an average free float of at least Rs 750 crore. Free float market capitalisation is the market value of shares not held by founders/promoters.

The third criteria is that the eligible scrips should also figure among top 200 stocks in terms of average daily volume during last six months.

Finally, Sebi rules require that eligible scrips have average daily volume of not less than Rs 5 crore in the underlying cash market, and that the stocks should be traded at least on 90 per cent of the trading days, during the last six months.

This condition has rendered Asian Paints, Glaxo, Nirma among others ineligible for options trading as they fail on the turnover test.

Circulating the scheme of eligibility of scrips on which options could be written, Sebi had said that it has estimated 30-35 shares to qualify initially.