Derivatives traders in India started warming up to options only after the financial crisis. But now options (particularly Nifty options) account for nearly three-fourths of the total derivatives trading on the National Stock Exchange. The rise in options trading has been aided by a differential tax structure, which has resulted in a considerable low outgo on statutory taxes such as the securities transaction tax on options contracts. In January 2008, the average daily turnover in options contracts amounted to Rs 6,600 crore. It now stands at Rs 55,600 crore. Futures trading during the same time has dropped from Rs 56,600 crore to Rs 20,000 crore.
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Graphic by Ahmed Raza Khan/Mint