Options contracts of Nifty Financial Services index witness wild swings

The options contracts of the Nifty Financial Services (FinNifty) index witnessed wild swings on Tuesday, their expiry day. According to data available on NSE’s website, the FinNifty put option with a strike price of 19,800 logged, a high of Rs 162 and a low of Rs 0.05—a swing of over 3,200 times. It opened at Rs 162 compared to the previous day’s close of Rs 224. Meanwhile, the underlying FinNifty index hit a high of 19,879.25 and a low of 19,651 before settling at 19,835, with a gain of 1.2 per cent over its previous day’s close. Some traders took to the social media highlighting the wild swings. An official said there swing was not on account of any freak trade. “Due to yesterday’s weakness in the market, the contract closed near its high on Monday. On Tuesday, it opened gap down as markets rebounded and went on to close near zero as it was the expiry day,” said an official. Queries sent to NSE remained unan­swered. Such wild swings are not uncommon, parti­cularly in option contracts that are thinly traded. Such incidents that cause huge losses to option writes. On September 8, BSE’s equity derivatives segment witnessed unusual trades with the price of the Sensex call option con­tract with strike price of 67,000 shooting up nearly 50 times from Rs 4 to Rs 200.