Algorithm are going to witness a major shift post November 20, 2024 after SEBI has introduced rule wherein only one Index per exchange can trade in weekly expiry and proposed margin change rules where in margin requirement will go twice from current levels. What does it mean for the Algorithms?
While the margin requirement will change, the trading cost will remain same. Since the lot size of the index will increase, brokers will most probably increase the brokerage in the same proportion.
Strategies in BANKNIFTY, MIDCPNIFTY and FINNIFTY will cease to exist. Good news is that NIFTY and SENSEX are available in weekly expiry so traders will have to find new strategies.
Traders might have to introduce intraday strategies on monthly expiries which will bring in more liquidity in Monthly Index Options along with stock options.
Spikes will continue in NIFTY and SENSEX weekly options. Irrespective of index, any underlying in its last week of expiry becomes volatile due to IV risk.
I do think this will be the last of any major risk the market will face as far as SEBI's interference with market rules are concerned.
As far as we are concerned we have already migrated to strategies that will be operational post November 20, 2024.
Our 10 Lakh Basket is already ready, stats for which can be checked at: https://www.rohitkatwal.com/10lakh
Our 20 Lakh Basket is already ready, stats for which can be checked at: https://www.rohitkatwal.com/20lakh
If you are interested in any of the Algorithms, do fill the consent form here and we will get in touch: https://docs.google.com/forms/d/e/1FAIpQLSfpeVs8k68EaFzLmBt7dqZIJABded8ZCp47EY6F7QQjfrbcFQ/viewform?usp=sharing
In the coming days we will be working on 30 Lakh as well as 50 lakh basket for our Algorithms. Stay tuned!
Do we think that Algorithm are finished. NO! I think this is just a transition period which will rationalize the market to a bigger extent. Weekly expiries had made the Algorithm Trading into a gambling den and this shift was a bitter pill that had to be swallowed. Going forward this will result in stable regulatory as well as market frame work.
Rohit Katwal
Comments