Index option annual premium turnover sees first dip in 8 years in FY25

Data shared by the National Stock Exchange (NSE) showed the annual premium turnover of index options declined to Rs 136 trillion from Rs 138 trillion in FY24

The annual premium turnover of index options has seen a dip for the first time in eight years during the financial year 2024-25 (FY25), against the backdrop of a series of regulatory measures to curb speculation in the derivatives segment.

 

Data shared by the National Stock Exchange (NSE) showed that the annual premium turnover of index options declined to ₹136 trillion from ₹138 trillion in FY24.

 

The drop, albeit small, comes after an exponential growth in options trading volume. Index options premium turnover has registered annualised growth of 58 per cent over the past eight years.

 

Following surveys that showed mounting losses by retail traders in Futures and Options (F&O), the Securities and Exchange Board of India (Sebi) had initiated several measures including limiting weekly expiries to one benchmark per exchange, higher contract sizes, and upfront collection of option premium from buyers.

 

According to NSE’s market pulse report for FY25, the monthly average premium turnover during the first eight months stood at ₹12.4 trillion -- those before the initial regulatory changes were brought into effect. It dropped to ₹9.1 trillion from December 2024 to March 2025. 

 

However, there has been a shift to stock options which recorded a 40 per cent jump year on year with the annual turnover nearing ₹20 trillion.

 

Additionally, despite a decline in the average daily turnover in the equity cash segment in recent months, the average trade size has grown in March.

 

The report also highlighted the shift in participation of foreign investors whose share in equity futures turnover exceeded 25 per cent, improving by 406 basis points year-on-year (Y-o-Y). The same in equity options rose to 9.6 per cent.

 

“Within equity futures, the rise was particularly higher in stock futures, where the foreign investor share surged 432 bps Y-o-Y to cross 28 per cent-- the highest annual level recorded to date. In index futures as well, their share grew by 105 bps Y-o-Y to 15 per cent in FY25,” stated the report.