Leading stock exchange BSE will introduce weekly futures and options contracts on Sensex 50 index from Friday.
The bourse will introduce 7 weekly futures and options contracts expiring on every Thursday of the week, excluding monthly expiry week, BSE—formerly known as Bombay Stock Exchange—said in a circular.
In case Thursday is a holiday, then contract expiry will be on the working day prior to that. New serial weekly future and options contracts will be introduced after expiry of the respective week’s contract, it added.
“The exchange shall introduce weekly futures and options contracts on S&P BSE Sensex 50 index with effect from October 26, 2018,” the bourse noted.
This index was launched in December 2016 to measure the performance of the 50 largest BSE-listed companies.
Derivative in financial markets typically refers to a forward, future, option or any other hybrid contract of pre- determined fixed duration, linked for the purpose of contract fulfilment to the value of a specified real or financial asset or to an index of securities.
Broadly, there are two types of derivative contracts—futures and options. A futures contract means a legally binding agreement to buy or sell the underlying security on a future date, while options contract gives the buyer or holder of the contract the right (but not the obligation) to buy or sell the underlying asset at a pre-determined price within or at the end of a specified period.