Finnifty futures and options contracts are traded on our National Stock Exchange (NSE). Futures and options are derivative contracts which derive its value from an underlying asset. In the case of Finnifty, the underlying asset is the Nifty Financial Services Index.
Nifty Financial Services (Symbol: FINNIFTY) index consists of the following 20 stocks from banking and financial sectors.
| Axis Bank | Bajaj Finance |
| Bajaj Finserv | Cholamandalam |
| HDFC Asset Management | HDFC Bank |
| HDFC Life | ICICI Bank |
| ICICI Lombard | ICICI Prudential Life Insurance |
| Indian Energy Exchange | Kotak Mahindra Bank |
| LIC Housing Finance Ltd | Muthoot Finance |
| Power Finance | REC |
| SBI | SBI Cards |
| SBI Life Insurance | Shriram Finance |
How is the Finnifty traded in India?
We have two types of products available for trade which are based on Nifty Financial Services index (Finnifty): futures and options.
National stock exchange (NSE) defines the future and option contract for Finnifty. They decide the market lot, expiry date and other contract details. These contracts will be available to trade from the date of introduction to the date of expiry.
In addition to Finnifty, we have Nifty, which consists of 50 large cap stocks and Bank Nifty which consists of 12 large stocks from the banking sector. Futures and options contracts of these two indices are also traded in NSE.
In BSE, we have futures and options contract for both Sensex and Bankex.
Nifty Financial Services (Finnifty) Index Futures
Nifty financial services (Finnifty) index futures come with 3 consecutive monthly trading cycles. The current month contract is known as Near month. Next month’s expiry future contract is referred to as mid month. Next to next month’s expiry contract is known as Far Month.
If December is the current month, then the contract that expires in the month of December will be referred to as Near Month. Contract that expires in January month will be known as Mid month. Contract that expires in the month of February will be referred to as Far month.
Expiry date of Nifty financial services (Finnifty) index futures contracts is the last Tuesday of the month. If last Tuesday is a trading holiday, then the expiry day is the previous business / trading day.
Nifty Financial Services (Finnifty) Index Options
Option is a contract in which the buyer has the right but not the obligation to buy or sell the underlying asset. We have two parties: buyer and seller. The buyer of the option contract pays the premium for the right, which is received by the seller for the right of the contract.
We have two types of Nifty Financial Services (Finnifty) Index Options: call and put. Both are European style and settled in cash.
Nifty Financial Services (Finnifty) Index Options comes with 4 weekly excluding the monthly expiry and 3 consecutive months trading cycle contracts.
Similarly to futures, monthly contracts are referred to as near month, mid month and far month. New call and put contracts are introduced on the next trading day on expiry of weekly and monthly contracts.
Nifty Financial Services (Finnifty) Index Options expires on the last Tuesday of the expiry period. If last tuesday is a trading holiday, then the previous trading day will be considered as expiry.
Current permitted lot size of both Nifty financial services (Finnifty) index futures and options contracts is 40. Which means if you want to trade in Finnifty futures, then in one lot you have to buy or sell 40 units or in multiplication of 40 units.
Similarly, to trade Finnifty option contracts, you have to buy or sell in the multiplication of 40 as one lot has 40 contract units.
Futures and options market is very volatile. One has to get in depth knowledge of the market before getting into trading and investing.
Disclaimer: In addition to the disclaimer below, please note, this article is not intended to provide investing or trading advice. Trading in the stock market and in other securities entails varying degrees of risk, and can result in loss of capital. Most investors and traders lose money. Readers seeking to engage in trading and/or investing should seek out extensive education on the topic and help of professionals.
