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According to the National Stock Exchange (NSE), now, traders will be able to buy futures and options contracts of Nifty Next 50 index as well. This will apparently draw retail traction in the derivatives market, deepening liquidity and widening trader base. It will amplify the volume of the derivatives market. It will also give more options to traders in the derivatives market. Initially, the stock exchange will launch three different F&O contracts each with one month of expiry. Each contract will expire on last Friday of the expiry month.

When can you buy Nifty Next 50 index derivatives?

Retail investors can trade the derivatives contracts after April 2024. In a statement, the NSE said “It has received approval for derivatives on Nifty Next 50 index from the Securities and Exchange Board of India (Sebi) and will launch these contracts from April 24, 2024.”

Which other NSE indices have F&Os?

There are numerous indices whose F&O contracts are traded in the market. The primary ones are derivatives of Nifty 50, Nifty Financial Services index, Nifty Midcap Select index, etc.

How much is India’s derivatives market volume:

The volume of the derivatives market of the country is ballooning! Since 2019, no country other than India has seen a higher volume of trade of options contracts in a year. In 2023, there were total of 85 billion options contracts traded in the country.

What is Nifty Next 50 Index?

The Nifty Next 50 index represents 50 companies from Nifty 100 after excluding the Nifty 50 companies. As of March 2024, the finance services sector dominated the Nifty Next 50 index, followed by capital goods and consumer services sectors. “The introduction of derivatives on the Nifty Next 50 index will complement the existing index derivatives product suite. The Nifty Next 50 index will represent the space between the Nifty 50 index comprising the top large & liquid stocks and the Nifty Midcap Select index comprising the top large & liquid mid-capitalised stocks,” Sriram Krishnan, Chief Business Development Officer at NSE, said.

What are derivatives?

Derivatives in market parlance refer to financial contracts between two or more parties and derive their value from an underlying asset or benchmark. Broadly, there are two types of derivative contracts — futures and options. A futures contract means a legally binding agreement to buy or sell the underlying security on a future date, while an options contract gives the buyer or holder of the contract the right (but not the obligation) to buy or sell the underlying asset at a predetermined price within or at the end of a specified period.