SEBI’s New F&O Rules: Lot Sizes, Margins and Expiry Changes Explained
The short answer: SEBI has raised the minimum contract value for index derivatives, cut most exchanges down to one weekly index expiry, added an extra margin charge on expiry day, and now monitors position limits through the trading day instead of only at close — all aimed at reducing retail speculation in short-dated options.
Why SEBI tightened F&O rules
Retail participation in index options grew sharply in recent years, and SEBI’s own study of individual trader accounts found that a large majority lost money in F&O segments, concentrated heavily around weekly expiry trading. The rule changes below were phased in specifically to reduce that speculative, expiry-day churn rather than to restrict long-term hedging or institutional activity.
What actually changed
| Change | What it means | Effective |
|---|---|---|
| Larger contract size | Minimum contract value raised to roughly ₹15–20 lakh; lot sizes increased (for example, Nifty 50’s lot size moved from 25 to 75) | 21 Nov 2024 |
| Single weekly expiry per exchange | NSE kept one weekly benchmark expiry; weekly contracts on Bank Nifty, Nifty Financial Services, Nifty Midcap Select and Nifty Next 50 were discontinued. BSE similarly trimmed BANKEX and Sensex 50 weeklies | 20 Nov 2024 |
| Extra Loss Margin (ELM) on expiry day | An additional 2% margin is charged on short options positions on the day they expire, calculated on underlying price × lot size | 20 Nov 2024 |
| Calendar spread margin removed on expiry | Reduced “hedged” margin benefit no longer applies to calendar spreads on the expiry date itself — full margin is required | 10 Feb 2025 |
| Intraday position monitoring | Client and broker position limits (5% and 15% of total open interest respectively) are now checked throughout the day, not just at day’s close | 1 Apr 2025 |
What this means if you trade options
The bigger lot sizes push up the capital required to take even a single-lot position, which was the point: SEBI wants F&O to be less accessible to traders risking money they can’t afford to lose on small, frequent bets. If you were used to trading weekly Bank Nifty options, that specific contract no longer exists — you now trade the monthly series or the remaining benchmark weekly. Expiry-day trading is also now more expensive because of the additional margin, which narrows the profit margin on very short-dated strategies.
Futures vs. options, in plain terms
A futures contract obligates both sides to buy or sell the underlying asset at a set price on a set date — the risk and reward are, in principle, unlimited in both directions. An options contract gives the buyer the right, but not the obligation, to buy (call) or sell (put) at a set strike price before expiry, so the buyer’s maximum loss is capped at the premium paid, while the option seller carries the larger, less capped risk. This asymmetry is exactly why SEBI focused its 2024–25 changes on options selling and expiry-day activity rather than on futures contracts themselves.
Practical takeaways
- Check the current lot size before placing an order — old contracts kept their original lot size until expiry, but all new contracts use the revised sizes.
- Budget extra margin if you plan to hold short options into expiry day.
- Calendar spread strategies now cost more to hold through expiry than before February 2025.
- Position limits are enforced live during the day, not just checked after market close, so breaching them can trigger action sooner.
Related reading
FAQ
What is the current Nifty 50 futures and options lot size?
Following SEBI’s November 2024 revision, Nifty 50’s lot size moved from 25 to 75 for new contracts, as part of a broader increase in minimum contract value across index derivatives. Always confirm the current lot size on your broker’s contract specifications page before trading, since exchanges review these periodically.
Why did SEBI remove weekly options on Bank Nifty and other indices?
SEBI limited each exchange to one weekly benchmark index expiry to reduce concentrated, high-frequency speculative trading around expiry days, after its research found that a majority of individual F&O traders were losing money, disproportionately around weekly expiries.
What is the extra margin charged on F&O expiry day?
An additional Extreme Loss Margin of about 2% of the underlying price multiplied by lot size is charged on short option positions on their expiry day, on top of standard margin requirements, to cover the sharper price swings that can occur close to expiry.
Are futures riskier than options for a retail trader?
Both carry meaningful risk, but they differ in shape: a futures position carries open-ended risk on both sides of the trade, while a bought option’s downside is capped at the premium paid. Selling (writing) options, however, carries risk similar to futures and is a major part of what SEBI’s rules are aimed at curbing.
Do SEBI's F&O rule changes affect long-term investors?
Not directly. These rules target the derivatives (F&O) segment specifically — buying and holding stocks, mutual funds, or index funds through your demat account is unaffected by lot size, expiry, or margin changes in the options market.