BSE F&O segment is known to all traders/investors but many stock market participants have ignored it for years. This month, the Bombay Stock Exchange introduced two new instruments – Bankex and Sensex. Within a few days of its launch, the turnover of the BSE has increased significantly as many people have begun trading the two new instruments. According to the BSE’s official Twitter handle, the turnover of the two scrips on 27th May 2023 was Rs 17k crore. The turnover of the same on 2nd June 2023 was 69k crore Rupees. Should you trade in BSE F&O segment? What charges will you have to pay to trade? What is the lot size, and how is the liquidity of Sensex and Bankex options? I have discussed the same in the following paragraphs.
Lot size is nothing but the number of shares of an instrument you’re buying or selling. Options are highly leveraged instruments. You won’t find a derivative contract whose lot size is 1. The lot size of Sensex option is 10 and that of Bankex is 15. This makes the two index derivative instruments with the smallest lot size.
The ITM options of Sensex cost within 1500 to 2000 Rs only and those of its counterparts i.e. Banknifty and Nifty are priced within 3500 to 10000 Rs (deep ITM).
Is the two new instruments good alternatives to Nifty and Banknifty? Yes, they are! The reason for the same is the lot size.
What about liquidity? The turnover of Sensex and Bankex derivative scrips has grown three folds in just a weel. This is a clear indication of good liquidity.
The brokerage charged by brokers such as Zerodha, ICICI Direct, etc for trading the two new scrips is the same.
How to trade? If derivatives segment for your account is active on Zerodha, you can get started with the two new instruments straightaway. If the segment isn’t active, you should activate it in order to buy and sell the Sensex and Bankex lots. Just type the name of the scrips in the Zerodha watchlist search box to see the same. The option to activate BSE F&O segment is greyed out in Kotak Neo application. ICICI Direct will let its users trade the two new BSE scrips soon.
NSE is the largest derivatives exchange in the world. BSE has given traders a new and cheaper option to trade. Things look pretty good for the exchange. It would be interesting to see the number of Sensex/Bankex contracts exercised to date by the year end.
