BIG: NSE Changes Nifty Bank Expiry to FRIDAY! Impact?
Good news for expiry day traders - The NSE has decided to shift the expiry day of Nifty Bank from Thursday to Friday. Till now, both the Nifty 50 and Nifty Bank indices had a weekly contract cycle that was expiring on the Thursday of every week and monthly & quarterly contracts expiring on the last Thursday of the month.
But from 7 July 2023 onwards, traders will have a weekly expiry session of Nifty Bank on Fridays, while the expiry day of Nifty 50 will remain the same, on Thursdays. 14 July 2023 will be the first Friday expiry session for traders. What Impact will it make on the market?
First and foremost, it will pump up the volumes on these instruments by ‘a lot’. This is a structural change in the market environment which might change the realm of the game. Currently, traders are forced to trade either Nifty 50 or Nifty Bank or both with divided volumes as these indices have expiries on the same day.
But now, as one index expiry is shifting to the next day, traders can utilize their entire fund on one index on one day and on another index the next day. Hence, we might soon see massive liquidity in both these indices after the implementation of this contract cycle shift of Nifty Bank. Not to forget, Nifty Bank’s lot size is anyway reducing by 40% to 15, from the current 25 (from July 2023 monthly expiry) which will work as a double dose for improved liquidity in the banking index.
Second, as I mentioned that it is a structural change, those doing algo trading or using backtested strategies might need to take a second look now as these systems might stop working or may work even better, who knows. But as they haven’t been backtested with this different contract cycle + reduced lot size of 15, one cannot rely on them anymore.
Third, there’s no doubt that it will probably generate a ‘significant’ business for all market intermediaries such as the exchange, brokers, SEBI, the government etc. In simple words, the more you trade, the more money market intermediaries will make.
Fourth, it might give very tough competition to Sensex and Bankex . These derivative instruments were recently relaunched by BSE and their expiry days were purposefully set on Friday to avoid competition from NSE’s Nifty 50 and Nifty Bank. But as NSE is shifting the Nifty Bank expiry to Friday, all instruments expiring on this day will have to fight for the volume, in which Nifty Bank already has an upper hand.
These strategic expiry days play a crucial role in the success of a derivative instrument. In fact, the popularity of Fin Nifty should also be credited to its Tuesday expiry, where there is no other index expiration. Let me know what's your opinion in the comment section.
Read More: Penny Stock Under Rs 5 Hits 20% UC, Has 2x Potential!
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Correction 14th July onwardsLike 0
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Introduction of weekly expiry in Index Option itself a organized loot that too to loot the retail small time trader's hard earned money, what difference the changes in expiry day is going to make ? a friendly advice to small traders to avoid out of money option and try in the money option with SLLike 3
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High low range of rallies might be reduced considering the splitup though volumes will increase as there will be tough war between bulls and bears ., at present , with BN swing , nifty also picks up ., but without Bn , nifty might slow down and as well BN has it own way of wild swings , in the end best price action winsLike
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any idea of 19250ce at end of June?Like
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0Like
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Bank stocks will be less volatile on ThursdaysLike 2
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why do people trade on expiry days ? any specific reason ?Like
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They do option selling as all OTM options become 0 on the expiry day, leading to profits for sellers.Like 1
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@Aayush Khanna not anymore, NSE is careful with that. Its the induced volatility and market being more receptive to sentiments that you can say vulnerability which further lures people.Like 1
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Premium is low for buyer on expiry day.Like 1
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both expiry will be a pause day... sideways... let's see😇Like
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don't think it will have a major impact on volumes. No breathing space back to back expires will not give much headroom. a days gap would have been better. this is purely to counter bse and nothing else.Like
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Nifty Bank’s lot size is anyway reducing by 40% to 15, from the current 25 (from July 2023 monthly expiry) which will attract more small investors.😀👍Like 1
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It's a welcome news. as a trader, I have more choices on indices to trade as well as on leveraging my capital.Like 1
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you are absolutely correctLike 1
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Almost every day in a week has expiry so there will be high volatility now.This is not good for low amount traders.Only option sellers and large institution will benefit.Like 4
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I used to take my trade on the first day of new expiry which used to be Friday, giving me the opportunity to benefit from theta decay however now i am in a fix, all my backtested data is of no reliability anymore.Like
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Correct. Backtests with Thursday expiry are no more reliable for the new expiry cycle.Like
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It's an organized loot ..... When Nifty Bank was there why they introduced Fin Nifty when the components are much similar with Nifty & Nifty Bank..... It's only to loot small investors.... Nothing new.....Like 6
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yes you are rightLike
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really good newsLike 1
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More liquidity might reduce the premiums on expiryLike
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I don't see any correlation between high liquidity and lower premiums.Like 2
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good decision for option sellersLike 4
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Definitely.Like
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