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Weekly Options

1. What are Weekly Stock and Index Options?

Exchange Traded Options based on a Stock or Index with shorter maturity of one or more weeks are known as Weekly Options.

2. What is the last trading day / expiration day for weekly options contracts and how they are generated?

The weekly series contracts expire on Thursday of each week. When the first week series for an underlying for the near week expires, a new weekly option series is generated in the EOD operations of the weekly expiry day. If expiry day of weekly contract coincides with near month contract expiry day then relevant new weekly contract is not generated.

3. How to identify weekly options series?

Nomenclature for Weekly options series:

Format Underlying Series Identifier Week3 Month Option Type Strike Price Total
No of characters 3 characters for Index and 4 characters for Stock 1 1 1 5 digits for Index and 4 digits for stock4 11
Example - For Stock BOSC A 9 C 7000 BOSCD9C7200
Example - For Sensex BSX A 9 C 17000 BSXA9C17000

Month is represented by the single digit as follows:

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec
1 2 3 4 5 6 7 8 9 O N D

Week is represented by alphabets A-E as follows:

Week 1 Week 2 Week 3 Week 4 Week 5

4. How are Weekly Options different from Monthly Options?

Weekly Options differ mainly in terms of maturity period. Currently Monthly Options have maturity of 1 month, 2 months or 3 months. As 1 month options expire, another options series get generated. In case of Weekly Options, the maturity will range from 1 week to 5 weeks. Also the nomenclature of weekly and monthly options contracts are different.

5. What will happen if expiry day is a Trading Holiday?

If the expiry day of the Weekly Options falls on a trading Holiday, then the expiry (as per SEBI guidelines) will be on the previous trading day.

6. What are the Similarities between Monthly and Weekly Options?

The parameters viz. Underlying, Contract Multiplier, Tick size, Price Quotation, Trading Hours, Strike price Intervals of the Weekly Options will remain exactly the same as that of Monthly Options.

7. What are the benefits of Weekly Option Contracts?

  • Weekly Options will command lower premium due to shorter maturity. Thus the Weekly Options will cost less than the Monthly Options.
  • For similar capital outlay as Monthly Options, participants can take larger positions.
  • Weekly Options will provide opportunity for Arbitrage between :
    • "One week to maturity" options and "two week to maturity" options.
    • Weekly Options and Monthly Options.
  • On account of low cost, the liquidity will improve, as more participants would come in.
  • Weekly Options would lead to better price discovery and improvement in market depth.
  • The market participants would be able to take a short-term view in the underlying also.
  • Weekly Options would provide market participants short term insurance for their short-term portfolio. This would result in better price discovery and improvement in market efficiency.

8. What are the Risk Management measures taken at the BSE level?

Since the introduction of Weekly Options is just the addition of new series and not a new product as such, the Risk Containment measures adopted for the Weekly Options would be similar to those applied for Monthly Options.