Question

Write the eligibility criteria of stock for trading in derivative?

Answer 1

Eligibility criteria of stocks:

• The stock is chosen from amongst the top 500 stocks in terms of average daily market capitalization and average daily traded value in the previous six months on a rolling basis.
• The stock's median quarter-sigma order size over the last six months should be not less than Rs. 10 lakhs. For this purpose, a stock's quarter-sigma order size should mean the order size (in value terms) required to cause a change in the stock price equal to one-quarter of a standard deviation.
• The market wide position limit in the stock should not be less than Rs. 300 Crores The market wide position limit (number of shares) is valued taking the closing prices of stocks in the underlying cash market on the date of expiry of contract in the month. The market wide position limit of open position (in terms of the number of underlying stock) on futures and option contracts on a particular underlying stock shall be 20% of the number of shares held by non-promoters in the relevant underlying security i.e. free-float holding.