What Will Happen When The Nifty Bank Lot Size Will Reduce From 25 To 15

The bank nifty lot size will change to 15 from 25 and even the expiry day is changing. Read the details below.

BANKNIFTY Futures and Options expiry day is changing from THURSDAY to FRIDAY.

NSE (National Stock Exchange) has not given any reason for this but I feel they want to finish the weekly FnO contracts on the last working day of the week.

Please note that even though they are known as weekly contracts they start trading much before the start of the week. This means that technically an option expiring next week should start trading from the expiry day of the previous week, but they start trading before that.

So what will happen to the current contracts that are set to expire on Thursday?

Nothing to panic about – they will expire on Thursdays only until Thursday, 6th of July 2023. This will be the LAST Thursday expiry of Banknifty Futures and Options contracts. From next week the Banknifty options and future contracts will expire on Fridays.

The first FRIDAY expiry will be on FRIDAY 14th of July, 2023.

After the market closes on Thursday, 6th of July 2023, all contracts will show the expiry date as Friday of that week not Thursday. This means on Friday, 7th of July 2023, when you log in to your trading account you will see all bank nifty futures and option contacts showing the expiry date as Friday, not Thursday.
There is no other change. So there is nothing to panic.

Now coming to the banknifty lot size. Currently, it is 25, however, the lot size of banknifty futures and options is reducing to 15 from 25 now.

All contracts expiring after July 1, 2023, will have the lot size of 15.

Please note that when the lot size changes margin also changes as per the size of the lot.

See how with the change in the lot size, the margin of banknifty futures and option selling will reduce.

Here is the difference – margin calculation done in June 2023:

Current lot size 25 – Future / Option selling margin required: 1,47,032.00
All contracts expiring after July 1, 2023 – lot size 15 – Future / Option selling margin required: 88,668.00
Margin calculator used: ZERODHA

I think this is done mainly to increase the participation of derivatives traders of banknifty.

On one side the market makers try to reduce the retail traders from entering the derivatives markets, on the other side, NSE does tricks to get more retail traders to trade. Not sure what exactly they want.

Anyway, all I can do is remind you to is to trade safely and carefully. Learn to hedge and respect your stop losses.

What will happen when the Bank Nifty lot size will reduce from 25 to 15:

1. It will bring liquidity to the market.

2. The selling margin will reduce from Rs 1,40,000 to Rs 85,000. This is 40% less. So some of the experienced traders will become sellers, who were buyers till June 2023.

3. There are a lot of traders who still do not know that if you hedge then the margin gets reduced for selling options and trading futures plus it also reduces the losses. These sellers will increase the number of Nifty Bank lots sold, compared to what they were selling now when the lot size is 25.

4. Then you have some I-am-very-smart-trader thinking type of traders who know that hedging reduces the losses plus the margin required but still do not hedge because they think they can never go wrong. These people will sell more than they are selling now as they will have more cash in hand.

5. High liquidity brings down the volatility in the markets. This will decrease India VIX and bring down the option premiums of both Index – Nifty and Bank Nifty. This is good news for my course customers – the success rate of strategy 1 will increase from 70% to 80%.

6. Option buyers will lose less due to decreased lot size but their loss percentage will increase.

7. Risk management will become easier as traders with 3-4 lakh cash will have extra money now to mitigate risk. Though trying in vain to save loss in a losing position results in more losses.

8. I feel a reduction in lot size in Nifty will also follow suit.

COPYRIGHT INFRINGEMENT: Any act of copying, reproducing or distributing any content in the site or newsletters, whether wholly or in part, for any purpose without my permission is strictly prohibited and shall be deemed to be copyright infringement.

INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However, every trade depends on the trader and his level of risk-taking capability, knowledge and experience. Moreover, stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website.

DISCLAIMER: I am NOT an Investment Adviser (IA). I do not give tips or advisory services by SMS, Email, WhatsApp or any other forms of social media. I strictly adhere to the laws of my country. I only offer education for free on finance, risk management & investments in stock markets through the articles on this website. You must consult an authorized Investment Adviser (IA) or do thorough research before investing in any stock or derivative using any strategy given on this website. I am not responsible for any investment decision you take after reading an article on this website. Click here to read the disclaimer in full.

Disclaimer | Privacy Policy | Terms and Conditions | Refund Policy | About Me | Conservative Option Course | 200+ Testimonials - What Traders Say About This Course | Contact Me

My student gets the Winner's Certificate of Zerodha 60-day Challenge - Click here and Open Stock Buy and Sell Free Account with Them Today!!!