Nifty Lot Size Reduced From 50 to 25 What Should You Do

by Dilip Shaw Date: May 3, 2024

in Nifty Options

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As of April 26, 2024, the National Stock Exchange (NSE) has reduced the lot size of Nifty futures and options contracts to 25 shares for all expiries, including weekly, monthly, quarterly, and half-yearly. This is a reduction from the previous lot size of 50. The NSE has also reduced the market lot of Nifty Financial Services from 50 to 25 and Nifty Midcap Select from 75 to 50, but these changes will take effect from July expiries. The lot size for Bank Nifty remains unchanged at 15.

Now the question is – do you need to change your trading strategy?

No. Do not change your trading strategy, if you win most of the time. If you lose more than 50% of the time – then you need to change your strategy anyway, or else you will keep losing. You can do my Nifty Conservative Options Course and start making consistent profits.

What about the margin?

Yes with the reduction in lot size, the margin has reduced. I see that if I create a Call Debit Spread on Nifty at 22,500 then the total margin blocked will be Rs. 11,250 – which is almost half of what was required when the Nifty lot size was 50.

For selling naked options and selling / buying naked futures – approx Rs. 64,000/- is required. Earlier it was over 1 lakh.

What about profit and loss?

Of course, when you are risking less, the profit and loss will also reduce by the same percentage. Whatever profits you used to make earlier on one lot will now be reduced by 40-50%.

Suppose earlier when the lot size was 50 – and you made a profit of 20 points. Your profit would have been:
20 * 50 = 1000.

However now for the same 20 points profit your profit in terms of cash will be:
20 * 25 = 500 – that’s a 50% reduction.

What should you do if you are a good trader and want to make the same profits?

There is only one way out. Double the number of lots to trade. Suppose You traded with 5 lots when the nifty lot size was 50 – now to make the same profit you have to trade with 10 lots. In this case, everything will be the same. The margin blocked will be the same and the profit and loss will be the same as earlier.

However, as General Elections 2024 are going on, trading with fewer lots is recommended. Once the elections are over – you can trade with whatever number of lots you are comfortable in.

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About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.