Options trading has been in vogue for more than a century. Over the Counter (OTC) custom options were available on commodities since the 1920s, while options on equities started trading on the Chicago Board Options Exchange (CBOE) in 1972.
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Options on currencies and bonds were introduced in the late 1970s, which were also traded OTC. Exchange-traded options on currencies started trading on the Philadelphia Stock Exchange in 1982, and interest rate options were introduced on the CME in 1985.
In India, options have been available since the inception of the market, but they were primarily traded in the off-market “Badla” system, which can be considered a grey market for derivatives transactions. However, the Badla system is now obsolete.
Options trading – History
Index futures were launched on June 12, 2000
Index options on June 4, 2001
Stock options on July 2, 2001
Single stock futures on November 9, 2001.
Growth of Options trading
Although the options market has been around since 2001, real liquidity in Indian index options was not seen until 2006. Since then, the Indian markets progressed leaps and bounds. For the forth consecutive year until 2022, NSE (National Stock Exchange) has stood at #1 Derivative Exchange in the world, based on the number of traded contracts.
Today, the options market in India is a significant part of the derivative market. Almost 80% of the derivatives traded in India are options, while the remaining 20% belongs to the futures market.
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