Last year’s record of 40.54 billion contracts has been surpassed during this financial year so far as index options trading account for 40.71 billion contracts which is 98.3 percent of total trades. The index options are all set to hit an all-time high this financial year. The lead researcher at IIFL Securities Jayesh Bhanushali said retail interest in options trading has picked up with cheap, zero-day options catching their fancy. This frenzy is expected to continue with daily option expiry and the lack of understanding of the technicality of trading in such instruments. Since the new faction of the market rally started in March the high deliverable volumes in the cash market have encouraged the retail interest. You should learn what NSE data showed about retail investors. Be sticky with this page and go through it till the end. Drag down the page.
According to data showed by NSE, the count of the retail investors was 4 million in August which was 3.7 million in July and 3 million in June. Therefore, it is expected that the retail investors will hit a record high in the past seven months. However, the data for September month has not been shared. The average retail investor count for FY23 was 2.8 million.
So far this fiscal year, Cash market delivery volume as a percentage of traded volumes has surged to between 20.46-25.19 percent from 17.98- 20.61 percent in FY23, on the back of the bull market rally in small-cap and mid-cap shares. The prominent increase in volumes means that those holding these shares can collaterally put them up against the cash margin requirement to sell options. Amit Gupta who is the vice president and fund manager at ICICI Securities, said investors besides retail meet exchange cash margin requirements for selling options with underlying shares they hold in demat form, thanks to a rise in delivery.
ICICI Securities’ vice president and fund manager kept on saying that it led the retail investors to increase their return on investment because of the increasing share price besides the premium received from selling options. Jayesh Bhanushali further added the buyer mostly loses and the seller wins most of the time. As sellers trade with more risk, they invariably are better informed and more intelligent than the buyers. This is the reason the seller wins most of the time. Buyers are not able to make money despite the low price of options due to low volatility.