Mumbai: A rally in global oil prices, sparked by the US-Iran war, has triggered a rush of retail trading in India’s crude derivatives, driving up futures and options volumes on domestic bourses. A similar surge was visible across mini crude contracts. Average daily lots traded in crude oil mini futures rose 473% from February to 356,672 in March, before easing to 324,383 lots in April. In crude oil mini options, average daily options volumes jumped to 70,58,572 lots from 39,23,338 in March and 27,80,379 in February.
Brokers noted that retail participation was largely concentrated in short-tenure positions, particularly in options. “There has been a drastic rise in retail participation in crude oil contracts. About 50-60% of volumes were higher than pre-war levels,” said Mehul Koradia, chief strategy officer and director, Mirae Asset Sharekhan. The increase in participation occurred even as trading conditions tightened, with exchange margins on crude oil contracts climbing to nearly 48%.
The spike in derivatives activity coincided with an unprecedented move in global oil prices. Brent crude futures surged more than 63% in March, with prices touching a high of $119.5 a barrel. On Wednesday, Brent crude futures were trading nearly 1% higher at around $102.9 a barrel. “Whenever any commodity witnesses heightened volatility, the retail participation sees a spike,” said Ajit Mishra, SVP — Research, Religare Broking.
Implied volatility in crude oil options spiked nearly fourfold to around 140% at the peak of the conflict in March. Navneet Damani, head of research — Commodities and Currency, Motilal Oswal Financial Services, noted that exchange margins on oil contracts had risen as high as 70% at the peak of volatility. Mishra cautioned that such phases often draw inexperienced traders chasing momentum.
