The National Stock Exchange (NSE) recently released a circular revising the scheme of strikes for stock options, effective from September 27, 2024. This update affects the way strike prices will be set for various stocks, potentially changing the way you trade options.
But what does this mean for you as a trader? Let’s break it down.
What are Strike Prices?
Strike prices are fixed prices at which a specific option contract can be bought or sold. For instance, if you’re trading options for a stock priced at ₹200, the exchange might set strike prices at intervals of ₹10—offering options at ₹190, ₹200, ₹210, and so on.
What’s Changing?
With the new update, the NSE has revised the intervals between strike prices for stock options. While this might sound technical, it can have a real impact on your trading strategy. Here’s an example:Imagine you’re trading options for Company X. Currently, strike prices for the stock are set in intervals of ₹10, ranging from ₹100 to ₹200. Starting September 27, these intervals may change to ₹20, and the strike range may shift to ₹140 to ₹300. This gives you fewer choices in some cases but more spread-out price ranges in others.
How Can This Impact Your Trading?
The changes may influence:
- Option Premiums: Wider strike ranges could lead to different option premiums, possibly affecting the cost of buying or selling options.
- Trading Strategies: With revised strike levels, you may need to adjust your options strategy, especially if you were targeting specific price points in the current system.
If you want to view the complete list of companies impacted by this revision, you can check the updated strike price list on the NSE website.
Stay Updated
Be sure to revisit your trading plans and strategies to align with these updates before they take effect on September 27, 2024.
Happy trading!