Extended Trading Hours At NSE: Why Options Traders Are Worried

In the world of finance, time is money – and the stakes are high. Traders often find themselves riding an emotional rollercoaster from the moment the market opens at 9:15 AM to when it closes at 3:30 PM. But what if that rollercoaster ride was extended to 11:55 PM?

For many, this nightmare has become a reality with the recent extension of trading hours in India.

How Extended Hours Will Affect Option Traders

Option traders are particularly concerned about how this change will affect their strategies and portfolio returns. Many of them are afraid that it mark the end of option trading as we know it? Or will it bring new opportunities for those willing to adapt? Let’s dive into the history and potential impact of extended trading hours in India.

Traders are concerned about the impact of extended trading hours on their option trading strategies. They fear that their current strategies may become ineffective and that the possibility of gaps will decrease, affecting traders who rely on gap-based strategies.

Positional option trading may become more challenging due to decreased option premiums and lesser uncertainty. Discretionary traders may find it difficult to keep up with the real-time data and monitoring the charts for such a long trading day.

Imagine a world where the stock market never sleeps, where day and night blur together in a frenzy of buying and selling. This is the reality of global exchanges like Singapore Exchange (SGX) and CME Group, where round-the-clock trading in key equity indices is the norm.

And now, the National Stock Exchange (NSE) in India is following suit with extended trading hours, driven by a desire to gain back lost market share and attract new investors who may not have had the opportunity to trade during traditional hours.

With this change, mutual funds, banks, and insurance companies with large equity holdings will have more options for hedging, leading to greater liquidity and potentially a brighter future for the Indian stock market.

NSE’s primary objective is to boost their business profitability by following the lead of other global markets and extending their trading hours. The US Futures market, for instance, operates nearly around the clock, six days a week, from Sunday evening at 6:00 p.m. EST until Friday at 5:00 p.m. EST.