Sensex options saw sharp swings during Thursday’s stock auction, with the 74,800 strike call surging 340% before collapsing within minutes.
Options contracts for BSE Ltd.’s Sensex Index soared over 300% during a stock auction on Thursday before collapsing within minutes, highlighting the gyrations that have plagued India’s derivatives market since the system was introduced last month.During the 20-minute window, the 74,800-rupee strike price call option of the index surged as much as 340% as the bourse data indicated a sharp uptick of as much as 1.4% in the measure. The 30-stock gauge eventually closed the session 0.2% higher, reversing a loss of 0.2% prior.The shift in momentum also caused the price of 74,900-rupee and 75,000-rupee call options to momentarily jump more than 200% each. All three contracts eventually closed in the red for the day.Sharp swings put pressure on regulatorThe price swings in the options minutes ahead of their settlement heightens the pressure on the country’s market regulator to resolve such episodes. The watchdog last week said it will release a discussion paper within a week to determine settlement prices for futures and options contracts, after market participants flagged concerns.One place where the market-wide impact became evident was in the price of the at-the-money straddle, which involves simultaneous buying and selling of put and call options. The straddle’s price briefly soared 14% from the previous session when it should typically drop to zero gradually during the day.New system faces liquidity, manipulation concernsIntroduced to align India with global standards and curb manipulation, the system has been beset with challenges including thin liquidity, low participation and alleged market manipulation. The sharp volatility stems from a mismatch in how the cash equities and options markets close. Stocks that have derivatives tied to them get their final prices via the auction, but options continue to trade while this process is still underway.Since some expiring options trade at almost no value, even a small move in the underlying index can turn a worthless contract into a big winner — and then worthless again minutes later.More stories like this are available on bloomberg.comPublished on September 11, 2026
