Sensex Call option price surged by 4800% from Rs 4.30 to Rs 209.25 in a minute on Friday

On Friday, September 8, 2023, a strange trade occurred, and it’s believed that a trader might have made a mistake when entering their order, resulting in a significant price jump of approximately 4800% in a single day for Sensex Call Options.

In a fraction of a second, the prices of Sensex 67000 strike call options surged from Rs 4.30 per lot to Rs 209.25 per lot, an increase of approximately 4800%.

Let’s delve into what exactly has happened on that day: 

At 11:02 a.m., the price of the Option Contract suddenly went up from Rs 4.30 per lot to Rs 209.25 per lot in just one minute. Then, in the very next minute, the price of the Option Contract was set at Rs 5.45 per lot, but not before a large number of about 5.49 lakh shares were traded.

One idea is that the trader might have used market orders instead of limit orders. When someone uses a limit order to buy something, it won’t buy at a price higher than the limit you set vice versa for a Sell Order. However, if a market order is used, it will buy at whatever price is available in the market until the order is filled.

Read: Types of Orders in Stock Market

This becomes a problem when dealing with options like the Sensex 67,000 Calls, especially if they are not very actively traded. Many brokers don’t allow market orders for options like these, and some people think the broker might have made a mistake.

Some traders reported this situation to their respective brokers and shared this instance on the platform ‘X,’ formerly known as Twitter.

Additionally, a trader reported a loss of Rs 78 lakh due to a wild swing in the premium within a few seconds just before the price became normal.

According to the information available, a trader reportedly placed an order to buy a Sensex call option at 67,000, which was initially quoted with a premium ranging from Rs 4 to Rs 5. The order caused the premium to rise to Rs 209, resulting in the acceptance of all sell orders placed up to Rs 209.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.