Most of you could have heard about the BSE relaunching its Sensex and Bankex futures and options contracts. These indices just finished their most memorable expiry week yesterday and are apparently acquiring a great deal of volumes. These contracts timed a combined turnover of INR 528 crores on Friday, which was certainly a decent beginning.
As an ever increasing number of stock brokers are equipping to give their clients admittance to Sensex and Bankex F&O contracts, here are a portion of the advantages of trading in these contracts that could end up being useful to you to work on your trading.
Diversification
Diversification is the major advantage of these indices as now traders can fan out the grouping of risks in their options trading portfolios. Prior, traders were essentially centered around three NSE-based indices - Nifty 50 , Bank Nifty and Blade Nifty yet presently with the introduction of 2 more (BSE-based), traders can undoubtedly chop down their risks.
Stability of an Index
Sensex is a broader market index, similar as Nifty 50, which basically implies a steady instrument for traders to fiddle with, unline stocks that have a lot higher unpredictability and can depict whimsical moves in a jiffy. Bankex is a monetary area based index, like Bank Nifty which again is substantially more steady than individual stocks.
Expiry on Friday
This would certainly be the most-cherished feature of these contracts by options traders. These new contracts have week after week expiries (7 week after week and 3 month to month) which makes options merchants leaned towards trading them due to a higher theta decay on week by week contracts. Be that as it may, the most interesting part is, these contracts have expiry days on Friday which doesn't conflict with the week after week expiry of Nifty 50 and Bank Nifty (Thursday) and Blade Nifty (Tuesday). Thus, presently you can do week by week expiry-put together trading with respect to three days every week.
Hedging and Pair Trading
These contracts have an extremely high correlation with the current broader market indices on the NSE, making them very reasonable for hedging. At the end of the day, a misfortune creating position in Nifty 50 can be hedged by taking a counter position in Sensex. Due to this high correlation, traders can likewise pair trading between these indices.
Lower Contract Value
Sensex has a great deal size of just 10 and at the CMP of 61,729, the complete contract value ends up being INR 6,17,290 which is just 67% of Nifty 50's contract value of INR 9,10,150. The lower contract value further lowers the gamble in a position as well as the margin requirements.
An additional benefit is, there are no exchange charges on a futures trade on BSE however the NSE charges 0.0019%.
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May 22, 2023
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