Index Options Curbs: SEBI Revises Exposure Limits in 2025
Why in the news
Retail traders still crowd into index options despite the October 2023 curbs and February 2024 proposals. India has the world’s highest index options volumes relative to its cash equity market.
Key facts
- SEBI study: individuals lost ₹1.89 trillion in FY22-24, mostly on expiry days; high-frequency traders profited.
- Index options use an index (Nifty 50, BSE Sensex) as the underlying asset, not single stocks.
Regulatory steps
| Time | Measure |
|---|---|
| October 2023 | Lot size up from 25 to 75; only one weekly expiry per exchange |
| February 2024 (proposed) | Intraday gross exposure cap of ₹1,500 crore; delta-based open interest calculation |
| 2025 (proposed) | Intraday cap dropped; gross limit ₹10,000 crore; net limit ₹1,500 crore checked at end of day |
- The shift followed market resistance to strict intraday surveillance, feared to cut liquidity and raise impact cost; all-day position monitoring may be dropped.
About index options
- A derivative giving the buyer a right, not an obligation, to buy or sell the index value at a set strike price by the expiry date.
- Call = right to buy; put = right to sell.
- Buyer pays only the premium, which is the maximum loss; profit depends on strike versus index level at expiry.
- Uses: trading market trends, hedging, leveraged exposure; positions can gain in rising or falling markets.
Exam angle
- Lot size now: 75 (was 25).
- Components: strike price, underlying index value, expiry date.