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Option writers bleed

The unprecedented surge in the Nifty and the Bank Nifty has hurt traders, especially those into option writing. Several out-of-the-money call options on the Nifty and the Bank Nifty index jumped more than 50 times on Friday. Ahead of the derivatives expiry, which takes place on the last Thursday of every month, traders write deep out-of-the-money options. It essentially means they sell an option contract and pocket the premium. On most occasions, they stand to gain as the intrinsic value of these contracts becomes zero on expiry day. However, these strategies went for a toss as several out-of-the-money