Home / Business and Economy / Sensex Options Skyrocket, Then Plunge: Trading Glitch?
Sensex Options Skyrocket, Then Plunge: Trading Glitch?
11 Sep
Summary
- Sensex options saw dramatic 340% surge then collapse.
- New trading system faces liquidity and manipulation concerns.
- Regulator plans discussion paper on settlement prices.
Extreme volatility gripped the Sensex options market on Thursday, with the 74,800 strike call option soaring by 340% within minutes before crashing. This episode highlights ongoing concerns since the introduction of India's new derivatives trading system last month. The 30-stock gauge closed 0.2% higher, reversing earlier losses, but not before call options across multiple strike prices saw brief, dramatic surges exceeding 200% each.
The rapid price swings in options close to settlement are escalating pressure on India's market regulator. A discussion paper addressing settlement prices for futures and options contracts is expected within a week. The recent system, designed to align with global standards and prevent manipulation, is currently plagued by thin liquidity, low participation, and alleged market manipulation, largely due to a mismatch between cash equities and options market closing procedures.
