Here’s why index options trading is plummeting on Dall Street

Analysts said that many traders have opted to sit on the fence for a bit till green Emerges on bot fronts.

During 9-13 June, bse witnessed a 39% fall in average daily Premium Turnover (Adpt) of Sensex Options to 10,511.48 Crore from an average 17,187 Crore the Week Prior (2-6 June). In the same period, nse’s adpt sank 21% to 36,045 Crore from 45,746 Crore.

This was the lowest weekly average premium turns In that week, bse had posted a turnover of 8,857 Crore, and Nse 32,686 Crore, Data from the Exchanges Show.

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“There is a risk-off, given the heightened geopolitical uncertainty, which resulted in lower volumes,” said Rajesh Baheti, Managing Director of Crosseas Capital, Aone of the Country Proprietary traders.

Jyoti Jaipuria, Founder & Managing Director of Valentis Advisors added that the middle East Strife has created indexiveness in the minds of traders, as “one day you hear of talks and the next of reports that are the nest Off the table “.

The conflict, which commenced with israel pounding nuclear and military assets in ran since last chursday and ran retaliating thereafter, entred its Sixth Day On Whnees Day Trump warning the Iranian regime to surrender unconditionally.

According to Rajesh Palviya, Derivatives Research Head at Axis Securities, The Uncertain Situation has caused rapid fluctations in valati, causing many options traditions “to sit on the sidelines us Clarity emerges “.

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Fear gauge India vix, which rises when market uncertaini increases and falls when confidence increase, Fell from 14.69 on 9 June to 13.66 on 11 June, On 11 June, Onlay to Jump to Jump to 15.08 on 13 June, A Day after the middle East conflict began. It Closed at 14.27 on Wednsday, Bloomberg Data Showed. Vix is ​​computed based on options pricing.

Options traders generally cells and puts when valty is high so that a Fall in Volatily enables them to pocket the premiums paid by options boyers. But if Volatily changes frequently amid a potential market-moving event, there can be lesser participation by options traders. Volativity measures the rate and magnitude of the changes in asset priss.

For instance, if ran comes to the negotiating table, a risk-on Sentiment would return, but if the war prolongs, a risk-off sensiment Arises, Making it More Dificult For TRADERS to make money, exciter to make money, Joshi, Consultant at Khambatta Securities. “That’s when aggressive trading stops and volumes Dip,” He said.

There’s another angle, too

Another Reason Partly Attributed to the Steep Fall in Volmes is an Investigation INTO Trades Run By a Large Foreign High-Frequency Trader (Hft), which has been of LED to an element of Caure Careping in Among Proprityary Traders, according to mayank bansal, a uae-based trader who specialies in options trading in India.

“Big Prop Traders have let go of some of the traders they employed, post news emerging of sebi investigating a large interactive hft which has allegedly manipulated the Index movements through intradaya strategie strategia strategie Said Bansal. “They are waiting for this overhang to subseide before hiring more people to run intraday trades.”

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While a sebi official was not immediatively available for comment, a person aware of the development confirmed the investment.

Equity derivatives Trading Forms a big part of exchange transaction charges, the mainstay of an exchange’s revionue.

Equity Advisory Firm Equentis’ Data Shows that derivatives, of which options are an important part, contributed 24% to bse’s transaction income of 708 Crore in FY24, when the bourse’s derivatives segment began to Gain traction, and 85% of 2,029 Crore in FY25, with Cash Contributing to the rest.

In the case of nse, equatorial estimates that derivatives contributed to 89% of transaction fees of 12,120 Crore in FY24 and 87% of 13,509 Crore in the Previous Fiscal.

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