Recently, the National Stock Exchange announced that it will start a pre-open session for the Futures and Options (F&O) segment as well. How will this impact trading going forward?
Well, most traders welcomed the move, as they believe that this will lead to better price discovery in both futures and options. Also, the market experts pointed out that the pre-open session will also bring down the volatility.
How will pre-open session for F&O segment impact sentiment?
Highlighting the implications of the NSE decision, Anand James, Chief Market Strategist at Geojit Investments, said, “Indeed, a welcome move as futures are preferred over spot for option pricing. This would pave the way for a stable opening for both futures as well as options.”
NSE’s decision for a pre-open session will bring down volatility in the early ticks (first few trades after opening), said Vipin Kumar, Assistant Vice President of Technical and Derivatives Research at Globe Capital. “This is a welcome move and will help in better price discovery. Initially, they are starting it with the current month’s futures contract,” he added.
NSE announces pre-open session for F&O
On November 4, the NSE announced that a pre-open session will also take place for the F&O category. The pre-open session will start on December 08. The timing for the session will be 9 A.M to 9.15 A.M. The session will work exactly the same as it does for the normal market.
However, the pre-open will apply only to the futures contracts of the current month for both individual stocks and indices.
This session shall be extended to the next month’s futures contracts in the last five trading days before the current month’s expiry.
If there is a Spread & Option contract on indices and stocks, then the pre-open will not apply. Adding to that, if there’s a futures of an underlying security on its ex-date of corporate action due to the scheme of arrangemen,t then also it will not participate in pre-open.