This article is only for readers who are active in options trading in the Indian stock markets, particularly S&P CNX Nifty Index (CNXNFTY-IN).
Although National Stock Exchange (NSE) of India boasts of listing option contracts with expiries of upto 3 months on nearly 300 stocks, there is hardly any liquidity on most of these contracts. An option is considered to be liquid if there are actively traded contracts for in the money, at the money and out of money strike prices. Anyone who has dabbled with options on NSE will agree that:
- Most of the stocks do not have ample buying/selling activity in option contracts
- Spread between the ask and bid prices is abnormally high
- Option contracts are available only for the near month expiry
Active trading in Indian options has helped me compile the below list of stocks which have enough liquidity to be considered for any meaningful trading or hedging. However, note that even these options are liquid only for near month expiry.
