Introduction of F&O Contracts on 9 Individual Securities – NSE Circular 87/2025

On May 30, 2025, the National Stock Exchange of India Limited (NSE) will launch Futures & Options (F&O) contracts on nine individual securities, as per Circular No. 87/2025 dated May 29, 2025, issued by the Futures & Options Department (Download Ref. No. NSE/FAOP/68243). This initiative, building upon prior circulars issued on May 7, 9, 20 and 22, 2025, aims to expand the suite of tradable instruments in the F&O segment, deepen market participation, and provide members with enhanced hedging and trading opportunities.

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Background & Rationale

NSE has continuously added more underlying assets in its F&O platform to respond to the changing needs of its members and follow SEBI’s instructions regarding market diversification. Trading individual stock derivatives on mid- and large-cap names has many advantages.

1. Risk Mitigation & Hedging: Market participants—particularly institutional investors and high-net-worth individuals—can hedge equity exposure in their portfolios more precisely by taking offsetting positions in stock-specific futures and options.

2. Diversification of Trading Strategies: Proprietary trading desks and algorithmic participants gain access to new volatility plays, mean-reversion strategies, and event-driven opportunities around corporate announcements of the newly listed names.

3. Alignment with Global Practices: Many leading global exchanges provide robust single-stock derivative ecosystems. The NSE’s expansion reinforces India’s position as a deep, liquid derivatives market.

Details of Contract Specifications 

Note: The scheme of available strike prices for these new contracts has been detailed in Annexure A to Circular 87/2025.

Transitional & Implementation Provisions

To ensure a seamless rollout and minimize operational disruption, the NSE has prescribed the following transition rules:

1. Effective Trading Date: All nine F&O contracts will be tradable on the Equity Derivatives segment from the market open on May 30, 2025.

2. Contract Tenors & Expiries:

• Monthly Series: Standard monthly expiry cycles apply, with the front-month contract expiring on the last Thursday of the month.

• Weekly Series (if applicable): Weekly expiry contracts (where available) will follow the existing Thursday-expiry convention.

3. Tick Size & Pricing:

• Futures Contracts: The tick size for futures will mirror that of the underlying share in the Cash Market segment.

• Options Contracts: All options will carry a standardized tick size of Re 0.05.

Market Impact & Participant Considerations

Liquidity Enhancement: With nine new names added to the F&O universe—including marquee pharma, defense, infrastructure and engineering stocks—the overall pool of derivative participants is poised to broaden. Market makers are expected to quote competitive two-way markets, thereby tightening bid-ask spreads.

Hedging Precision: Portfolio managers can now tailor their hedges more granularly. For instance, a fund with significant exposure to defense sector names can use BDL futures to offset market risk, rather than relying solely on index-based derivatives.

Volatility Dynamics: The introduction of single-stock options inherently invites volatility trading strategies—straddles, strangles, butterflies—around corporate events such as earnings, board meetings and regulatory approvals. This could lead to episodic bursts of intra-day volatility, particularly in lower-liquidity scripts.

Operational Readiness: Brokers and members should update order-management systems, risk-control modules and margin calculators to incorporate the new symbols and lot sizes. Participants running algorithmic strategies must back-test their models on historical price series to ensure robust performance under the revised contract specifications.

Conclusion

The launch of nine individual stock F&O contracts marks a pivotal expansion of the NSE’s derivatives landscape. Thanks to precise hedging, new trading options and helping with price discovery, these contracts should lead to more widespread and liquid trading.

With good preparations in place, participants can fully leverage the expanded F&O offerings and navigate the opportunities presented by the nine new individual securities contracts on the NSE.

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