India’s Equity Options Market – a Giant too hard to tame?
Unexplained wild short lived price swings on option expiries and underlying cash market don’t bode well for broader market development. (For those well versed with India’s options market and ODTE please jump to page 6 on Potential Risk loopholes) India’s ever booming equity options market can easily be touted as the third obsession of the country in addition to Bollywood and Cricket. Indian exchanges have facilitated the highest options contracts volume in the world since 2019 with National Stock Exchange bearing the crown for the largest derivatives exchange by far in terms of futures and options contracts traded. Chart 1 – India boasts of the largest option contract volumes in the world Each passing year however the crown gets heavier and likely harder to manage as the burgeoning derivative volumes have dwarfed cash markets volumes to potentially create an ecosystem rife for manipulation in the guise of speculation . Before we get into...