Options trading in India has experienced significant growth, particularly among retail investors. This surge has prompted the Securities and Exchange Board of India (SEBI) to implement new regulations to ensure market stability and protect investors..

SEBI oversees options trading in India, ensuring transparency and investor protection. In response to the rapid increase in retail participation and associated risks, SEBI introduced several measures effective from November 20, 2024:

Reduction of Weekly Expiries: The number of weekly expiries for index derivative contracts has been reduced to one per benchmark index per exchange. This aims to curb speculative trading and limit risks associated with uncovered option selling.

Increased Contract Sizes: The minimum trading amount for derivatives has been raised from the current range of Rs.5–10 lakh to Rs.15 lakh, ensuring that investors undertake appropriate risks.

Enhanced Risk Disclosure: SEBI mandates brokers to provide comprehensive risk disclosure documents to individual traders in the equity futures and options segment, highlighting potential risks involved.

Taxation and Transaction Costs: Options trading in India is subject to the Securities Transaction Tax (STT). As of April 1, 2023, the STT on options has been increased by 25%, with the tax on options (sell side) now at 0.0625% of the premium.

Conclusion
Options trading in India offers diverse strategies for investors to navigate various market conditions. However, it's crucial to stay informed about regulatory changes and understand the associated risks. Engaging in options trading requires a thorough grasp of market dynamics and adherence to regulatory guidelines to ensure informed and responsible trading decisions.