Market regulator Securities and Exchange Board of India (Sebi) has floated a consultation paper proposing a new framework for the introduction and management of strike prices in options contracts, aimed at ensuring smoother trading during periods of sharp intraday volatility.The market regulator in a three-page consultation paper said the proposal seeks to improve predictability and availability of option strikes, especially in situations where rapid price swings push the underlying asset beyond the farthest available strike price, creating inconvenience for traders.Under the proposed framework, stock exchanges will be required to put in place a comprehensive mechanism for introducing and reviewing option strike prices across segments such as equity, currency and commodities. Exchanges would need to ensure the availability of a minimum number of in-the-money (ITM) and out-of-the-money (OTM) contracts, conduct daily reviews of strike availability around prevailing market prices, and eliminate strikes that move too far away from active trading zones.A key feature of the proposal is the ability to introduce fresh strike prices intraday in the direction of market movement without requiring brokers or market participants to make system-level changes during live trading hours.Sebi has proposed giving exchanges operational flexibility in deciding strike intervals, the number of contracts to be introduced and whether wider intervals should be maintained for strikes far away from prevailing prices. The regulator also wants exchanges to periodically review the framework in consultation with market participants and publish the mechanism on their websites.The proposed norms would replace the existing clause related to rationalisation of strike intervals under SEBI’s master circular on stock exchanges and clearing corporations issued in December 2024.Sebi has invited public comments on the consultation paper till June 15, 2026.(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)