TITLE:
The Impact of Maturity on Futures and Options with Reference to National Stock Exchange: An Exploratory Study
AUTHORS:
B. Radhakrishna, S. Ravikumar, B. D. Hansraj
KEYWORDS:
Futures, Options, Maturity, Nifty Weekly Options, Bank Nifty Index, Bank Nifty Weekly Options
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.6,
August
5,
2019
ABSTRACT: National Stock Exchange was ranked foremost for
trading of individual futures stocks in the year 2007. Since then trading of
stock futures has witnessed a tremendous growth in India. Futures and options
instruments have not only emerged for trading but also to minimize the risk
associated with stock price fluctuations. Index, stock futures and options are
based on monthly, bimonthly and quarterly contracts which expire on last
Thursday of the month. The scope for studying futures and options has gained
prominence with the introduction of weekly option contracts of Bank Nifty and
Nifty Index Option at National Stock Exchange. It is believed that longer-dated
options are more sensitive to the risk of intertemporal shift in any economic
environment while shorter dated options are comparatively less risk sensitive.
The factors stated above stress upon the need to explore the impact of maturity
date on futures and options. Thus, the present study makes an attempt to
present a detailed review of literature in this context. The present paper is
of threefold. Firstly, it attempts to draw inferences based on literature
review in relation to impact of maturity effect on derivatives market in
National Stock Exchange. Secondly, it also makes an attempt to bring out the
effect of monthly and weekly futures and options contracts. Towards the end,
based on the analysis efforts had been made to draw a meaningful conclusion
which may be helpful to academicians as well as investors and also may provide
scope for further research.