India’s derivatives market is evolving rapidly, with the popularity of options trading increasing day by day. Alongside this growth, regulatory changes are being considered to keep pace with market dynamics and the needs of traders.
Over the past few years, India has emerged as one of the world’s largest index options markets. Amid rising volatility and growing retail participation, the availability of appropriate strike prices has become increasingly important for traders.
Let us understand SEBI’s proposed changes in detail and what impact they could have on the market if exchanges are allowed to introduce new options strike prices during trading hours.
What’s Happening?
To make options trading more efficient and balanced, SEBI is considering introducing a uniform framework to improve strike price management. The proposal includes allowing exchanges to add new strike prices during market hours so that options can be made available immediately in line with rapidly changing market conditions.
This step is being considered necessary because the existing system does not always respond effectively to sharp intraday movements. Often, the gap between available strike prices and the actual market level becomes too wide, making it difficult for traders to hedge accurately. In addition, delays in adding new strikes can result in missed trading opportunities.
A strike price is the fixed level at which an options contract can be exercised. With a wide range of strike prices and sufficient liquidity, traders can take positions according to their market view or manage risk more effectively. In this context, the proposal could strengthen both the efficiency and flexibility of the options market.
Current Challenges and the Need for the Proposal
During periods of rapid market movement, the appropriate strike prices are often unavailable, which limits trading opportunities. At the same time, many older strike prices remain listed despite being far from the current market level and witnessing little or no activity. SEBI has recognised this issue and highlighted the need to improve strike price management.
Currently, SEBI’s regulatory framework is primarily focused on long-dated index options, while stock, currency, and commodity options are governed by exchange-specific policies. This creates inconsistency in the market. Some exchanges allow new strikes to be added intraday, while others do not, affecting the trading experience and risk management.
To address these challenges, SEBI is considering introducing a comprehensive and uniform framework with clear rules for the introduction and management of strike prices across all asset classes, including equity and commodity derivatives. Discussions on this proposal have also been held with exchanges, brokers, and other stakeholders. With rising retail participation and derivatives volumes, the timely availability of relevant strike prices has become increasingly important for market stability and effective risk management.
Why Has SEBI’s Focus on Strike Price Gaps Increased?
Amid the rapid growth in India’s derivatives market, particularly in index options, SEBI has increased its focus on the issue of strike price gaps. According to the National Stock Exchange (NSE) March 2026 report, the average daily turnover in index options stood at Rs 40–50 lakh crore, highlighting the scale of this segment.
Meanwhile, a SEBI study found that more than 90% of retail traders incurred net losses in futures and options, underlining the structural risks in this segment. With participation continuing to rise, understanding and reducing these risks has become even more important.
According to SEBI’s observations, during volatile trading sessions, relevant strike prices are often unavailable, while far out-of-the-money strikes remain listed despite low activity. This makes execution more difficult for traders and reduces hedging efficiency, ultimately affecting overall market efficiency.
What Does This Mean for Investors?
This proposal could be positive for both retail and institutional investors. The availability of appropriate strike prices during rapid market movements may help reduce trading costs and improve execution quality.
Short-term and intraday options traders, in particular, are likely to benefit the most. Better liquidity and smoother hedging opportunities can improve overall market efficiency, which may also support better price discovery in underlying stocks and indices.
However, according to a SEBI study, more than 90% of individual traders incur net losses in futures and options. Therefore, investors should continue to focus on disciplined trading and sound risk management, even if more strike prices become available.
What’s Next?
Under SEBI’s proposal, exchanges may soon receive permission to adjust options strike prices during intraday trading. The objective is to improve efficiency and transparency in volatile markets so that traders have access to options that better reflect real-time market conditions.
This uniform framework will help bring consistency across asset classes and exchanges. It will ensure traders have access to relevant strike prices in varying market scenarios, making hedging easier and trading decisions more effective. Overall, this step could play an important role in strengthening risk management and improving the smooth functioning of the derivatives market.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. The companies mentioned are cited as examples within the context of market developments. Investors are advised to conduct their own due diligence and consult their financial advisor before making any investment decisions.
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