SEBI approves 31 stocks for trading in option contracts

By Our Special Correspondent

MUMBAI, JUNE 21. The Securities and Exchange Board of India (SEBI) today approved 31 stocks for trading in option contracts. The option contract will have a minimum contract size of Rs. 2 lakhs at the time of its introduction in the market.

The stock option contracts will be premium settled American style contracts, which shall be settled in cash at exercise, for an initial period of six months; thereafter, the stock option, at exercise, shall be settled by delivery, SEBI stated in a press release here today. The list is based on the eligibility criteria laid down by SEBI.

The stocks approved under option contracts are: ACC, Bajaj Auto, Bharat Petroleum Corp, BHEL, BSES, Cipla, Digital Equipment, Dr. Reddy's Laboratories, Grasim Industries, Gujarat Ambuja Cement, Hindustan Lever, Hindustan Petroleum Corp, Hindalco Industries, HDFC, ICICI, Infosys Technologies, ITC, Larsen & Toubro, Mahindra & Mahindra, MTNL, Ranbaxy Labs, Reliance Petroleum, Reliance Industries, Satyam Computer Services, State Bank of India, Sterlite Optical Technology, Telco, Tata Power, Tisco, Tata Tea and Videsh Sanchar Nigam.

SEBI further stated that the stock option contracts to be traded on the derivative exchange or segments shall have its prior approval. The contracts shall comply with the disclosure requirements laid down by SEBI. The stock option contract have a maximum maturity of 12 months and shall have a minimum of three strikes (in the money, near the money and out of the money).

The initial margin requirements shall be based on worst case loss of a portfolio of an individual client to cover 99 per cent VAR over one day horizon. A portfolio base margining approach shall be adapted which will take an integrated view of the risk involved in the portfolio of each individual client comprising his positions in derivatives contracts.

A stock to be traded in the option should be among the top 200 scrips, on the basis of average market capitalisation during the last six months and the average free float market capitalisation should not be less than Rs. 750 crores. Free float market capitalisation means the non-promoter holding in the stock. The average daily volumes should not be less than Rs. 5 crores in the underlying cash market. These stocks also should be traded on at least 90 per cent of the trading days in the last six months, with the exception of cases in which a stock is unable to trade due to corporate actions like de-mergers. The non-promoter holding in the company should be at least 30 per cent.

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Section  : Business
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