SEBI options strike-price rules: intraday update 2026

What SEBI has proposed

The Securities and Exchange Board of India (SEBI) has floated a consultation paper seeking suggestions on how strike prices in options contracts should be determined and managed. The regulator’s stated objective is to make strike price availability more efficient, systematic, and predictable when markets move sharply during the day. The proposal covers options across equity, currency, and commodities derivatives segments. SEBI’s paper notes that traders can face inconvenience when the underlying moves beyond the farthest available strike during fast intraday moves. The consultation is positioned as a framework-level change, with implementation details to be drafted by stock exchanges.

Why strike prices matter in fast markets

In options trading, strike prices are the pre-arranged price levels at which contracts are available to trade. When markets move quickly, the distribution of available strikes becomes important for liquidity and continuity, especially for traders needing contracts both below and above the prevailing market level. SEBI’s consultation highlights that, under the current framework, suitable options may not be available when prices move beyond the listed strikes during sharp moves. That gap can disrupt trading and increase operational friction for market participants. The regulator’s proposal aims to reduce such disruptions by making strike availability more consistent.

Dynamic, intra-day linkage to market movement

A central feature of the proposal is to require exchanges to create a framework that dynamically links strike prices to intraday market movements. In practical terms, exchanges would be expected to add new strike prices during market hours when the underlying moves in a particular direction. SEBI’s paper states that these intraday introductions should be aligned with the direction of movement in the underlying asset or futures contract. The intent is to ensure that traders continue to have usable strikes even when the market moves beyond the earlier range of strikes listed for the day.

Daily review and removal of far-away strikes

Alongside intraday additions, SEBI has proposed that exchanges conduct a daily review of existing strike prices. The consultation paper describes a process to purge or eliminate option contracts that become far away from the prevailing market price and move out of active trading zones. This is meant to keep the listed strike set relevant around current price levels rather than letting stale, far-out strikes remain listed indefinitely. The proposal also says exchanges should review strike availability around prevailing prices daily, with the aim of maintaining continuity in trading.

Minimum ITM and OTM strikes around the live price

SEBI’s consultation paper proposes that exchanges ensure the availability of a minimum number of in-the-money (ITM) and out-of-the-money (OTM) option contracts. The regulator’s framing is that traders should have enough choices on both sides of the current market price. The minimum-availability concept is meant to prevent situations where only a narrow or one-sided set of strikes is listed. SEBI has indicated that the rules and formulae may differ across sub-segments depending on liquidity and participation levels.

No live-system changes for brokers during intraday additions

SEBI has explicitly addressed operational risk by stating that intraday introduction of new strike prices should not require changes in the systems of stockbrokers or market participants during live market operations. The consultation paper describes this as a design requirement, so strike additions can occur without forcing mid-session technology or process changes at intermediaries. This point is significant because it ties the proposal not only to market structure but also to trading operations and continuity.

Discretion for exchanges on intervals and number of contracts

While SEBI is proposing a standardized framework, it is also giving exchanges operational flexibility. The regulator said the operationalization of the rules will be at the discretion of individual stock exchanges. That discretion includes whether to keep larger strike intervals for contracts away from the prevailing market price, the number of options contracts to be issued, and other implementation choices. SEBI has also noted that India’s two leading exchanges, the National Stock Exchange of India and the BSE, currently follow different rules to set strike prices, and the consultation seeks a more consistent approach.

Publication, periodic review, and consultation expectations

SEBI’s paper proposes that exchanges publish their strike management frameworks on their websites. It also asks exchanges to periodically review the framework in consultation with market participants. This reflects SEBI’s attempt to make strike-management rules transparent and subject to structured feedback cycles. The consultation itself is an early step in that direction, with SEBI inviting suggestions from market participants.

How this fits into SEBI’s existing rulebook

SEBI has said the proposed norms would replace the existing clause related to rationalisation of strike intervals under SEBI’s master circular on stock exchanges and clearing corporations issued in December 2024. By positioning the new approach as a replacement clause, the regulator is indicating that strike-price management will move from a narrower interval-focused clause to a broader framework covering introduction, review, and removal of strikes. The paper also notes that the framework will apply across segments, with customization allowed based on liquidity and participation.

Key proposals at a glance

Market impact: what changes for traders and liquidity

SEBI’s stated market-structure goal is to prevent traders from “running out” of usable contracts during sharp intraday moves. If exchanges can add strikes in real time and prune stale strikes daily, the listed strike set should remain clustered closer to the live price during volatile sessions. The consultation also frames this as a way to improve predictability in strike availability across equity, currency, and commodities derivatives when markets move sharply. Because SEBI has emphasized that intraday additions should not require broker system changes during live operations, the regulator is also addressing operational continuity as part of market stability.

What SEBI is asking the market to do next

SEBI has invited public comments on the consultation paper until June 15, 2026. Market participants are expected to respond with feedback on the proposed framework, including practical implementation considerations for intraday strikes, daily reviews, and minimum ITM-OTM availability. Any final framework would be operationalized by exchanges through rules and formulae, which SEBI expects to be published and periodically reviewed with participants.

Historical note from earlier consultations on strike intervals

Separately from the current consultation timeline, SEBI has previously discussed design approaches where strike prices remain uniform only within a 4% range of the prevailing spot or market price, with wider intervals beyond that range (around 4% to 8%). That earlier consultation also referenced an initial cap of no more than 50 strikes, with new strikes added daily as needed, and sought public comments until August 20, 2024. The current consultation, however, focuses on a broader framework for intraday introduction, daily review, and removal of strikes, and it sets a comment window ending June 15, 2026.

Conclusion

SEBI’s consultation paper proposes a more structured way for exchanges to introduce, review, and remove options strike prices across equity, currency, and commodities derivatives. The key operational change is enabling intraday strike additions aligned with market moves, backed by daily reviews to remove far-away strikes and maintain a minimum number of ITM and OTM contracts. SEBI has also kept flexibility with exchanges on strike intervals and the number of contracts, while requiring publication and periodic review of the framework. The next confirmed step is the public consultation process, with comments invited until June 15, 2026.