BSE ‘straddle and paired options’ contracts from Monday

By: |
Mumbai | December 06, 2015 4:16 PM

BSE's new contracts will allow traders to take positions across two different option contracts -- call and put -- with same underlying asset (such as rupee-dollar exchange rate) and with the same expiry by entering a single order.

bse BSE’s new contracts will allow traders to take positions across two different option contracts — call and put — with same underlying asset (such as rupee-dollar exchange rate) and with the same expiry by entering a single order. (PTI)

Leading exchange BSE will offer from tomorrow new specialised contracts named ‘straddle and paired options’ in its currency derivatives segment.

These new contracts will allow traders to take positions across two different option contracts — call and put — with same underlying asset (such as rupee-dollar exchange rate) and with the same expiry by entering a single order.

The BSE had earlier made these specialised straddle and paired option contracts available in simulation environment for testing, while they were also tested in a market-wide mock trading conducted yesterday.

The ‘paired options’ contracts are specialised two-legged contracts that allow a trader to take positions on two different option contracts belonging to the same product, at the same strike price and expiry.

The paired option contract will comprise one Call leg and one Put leg having same strike price and expiry. Buying such contract implies taking a buy position in the individual Call option contract and sell position in the individual Put option contract with same strike price and expiry.

The ‘straddle’ contract is a specialised two-legged option contract and comprises two individual legs — the first being the call option leg and the second being the put option leg, having same strike price and expiry.

Buying a straddle contract implies taking a buy position in the individual Call option contract and buy position in the individual Put option contract with same strike price and expiry.

The BSE said both these contracts are available on current, near and far monthly as well as quarterly and half yearly option contracts.

The paired option contracts are already available in the BSE’s Equity Derivatives segment and now they will also be available in the Currency Derivatives segment.

The straddle contracts will be offered in the Currency Derivatives segment to start with.

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