Tighter Spreads, Lower Impact Costs: How the New 1-Paisa Tick Size for Stock Options Saves You Money

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Hello Upstox Community,

We’re reaching out to discuss an important update from the NSE that is now live and positively impacting your options trading experience. As of 3 November 2025, the tick size for certain stock options has been reduced.

Let’s break down what this means for you.

First, What is a Tick Size?

In simple terms, the tick size is the smallest possible price movement of a security on an exchange. It’s the minimum amount by which the price can change.

For example: If an option has a tick size of ₹0.05 (5 paise), its price can move from ₹10.00 to ₹10.05 or ₹9.95, but it cannot be quoted or traded at ₹10.02. The price must always move in multiples of its tick size.

Details of the New Tick Size

Following a new circular from the NSE, the tick size for stock options now depends on the price of the underlying stock.

  • For stocks priced below ₹250: The tick size for their options has been reduced from ₹0.05 to ₹0.01 (1 paisa).
  • For stocks priced at or above ₹250: The tick size for their options remains unchanged at ₹0.05 (5 paise).

This change went live on Monday, 3 November 2025.

A History of Positive Changes

This isn’t the first time the NSE has made such an adjustment to improve market efficiency. A similar revision was made for stock futures earlier this year (as detailed in circular NSE/FAOP/67134), which brought their tick sizes in line with their underlying stocks. This new update for options is a continuation of that effort to create a better trading environment.

You can read the full details in the official NSE circular here.

What This Means for You: The Real-World Impact

So, why is a smaller tick size a big deal? It has two major benefits for you as a trader:

  1. Tighter Bid-Ask Spreads: The ‘spread’ is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). A smaller tick size allows for smaller gaps between these two prices, which leads to more competitive pricing.
  2. Lower Impact Costs: A tighter spread directly translates to a lower cost of trading. This is especially significant for options contracts that have large lot sizes.

Let’s take an example with ONGC:

Imagine ONGC is trading at ₹246. Since this is below ₹250, its options now use the new 1-paisa tick size. The lot size for ONGC is 2,250.

  • Before the change (with a tick size of ₹0.05): The spread might have been ₹5.50 (bid) and ₹5.55 (ask). The 5-paisa difference meant an impact cost of ₹112.50 per lot (₹0.05 x 2,250).
  • Now, after the change (with a tick size of ₹0.01): The spread can be as tight as ₹5.50 (bid) and ₹5.51 (ask). The 1-paisa difference means your impact cost is just ₹22.50 per lot (₹0.01 x 2,250). This reduction in cost can make a substantial difference to your trading profitability over time.

We believe this is a welcome move by the exchange that will enhance liquidity and reduce costs for traders.

As always, we’re here to ensure you have the best trading experience possible. Have you noticed the impact of this change in your trading? Let us know your thoughts in the comments below!

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