Upcoming Index Option Lot Size Changes: What Traders Must Know (With Simple Examples)

Introduction: Why Lot Size Changes Matter More Than You Think

If you trade Nifty, Bank Nifty, Fin Nifty, or Midcap Nifty options, an important structural change is coming — index option lot sizes are being revised.

At first glance, this may look like a small technical update.
In reality, lot size changes directly impact:

• Capital required per trade

• Risk per lot

• Profit & loss swings

• Position sizing strategies

• Option selling viability

This guide explains what is changing, why NSE is doing it, and how it affects your trading, using clear real-world examples — no jargon, no confusion.

What Is a Lot Size in Index Options?

A lot size is the number of index units in one option contract.

📌 Formula to remember

Option P&L = (Option Price Change) × (Lot Size)

So, even a ₹10 move behaves very differently depending on the lot size.

Why NSE Is Changing Index Option Lot Sizes

The NSE periodically revises lot sizes to ensure that:

• Contract value stays within a reasonable range

• Retail participation remains healthy

• Risk doesn’t increase automatically just because indices rise

As indices like Nifty and Bank Nifty grow over time, old lot sizes make contracts too expensive.
The solution? Reduce the lot size.

Upcoming Index Lot Size Changes (Effective from Jan 2026 Contracts)

⚠️ Important:
These new lot sizes apply to contracts expiring after December 30, 2025
(👉 January 2026 expiries and beyond)

Revised Lot Size Table

 

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Simple Example: How This Changes Your Risk & Capital

Example 1: Nifty Option Buyer

Assume:

• You buy Nifty Call Option

• Option price moves by ₹20

Before (Lot Size = 75)

After (Lot Size = 65)

✅ Impact:

• Lower volatility per lot

• Slightly reduced profit & loss

• Better control for retail traders

 

Example 2: Bank Nifty Option Seller (More Impactful)

Assume:

• Bank Nifty option premium = ₹200

• Lot size change: 35 → 30

Margin Impact (Approximate)

✅ What this means

• Lower capital blocked

• Easier hedging

• Better risk-reward alignment

 

How Lot Size Changes Affect Different Types of Traders

1️⃣ Option Buyers

Benefits

• Lower capital per trade

• Reduced emotional pressure

• Easier scaling (add/remove lots)

Drawback

• Slightly lower absolute profit per trade

 

2️⃣ Option Sellers (Most Affected)

Major Advantages

• Lower margin requirement

• Reduced overnight risk

• Easier adjustment strategies

• More retail-friendly spreads

This is especially positive for:

• Iron Condors

• Strangles

• Calendar spreads

 

3️⃣ Small Account Traders

Earlier problem:

“I can trade Bank Nifty strategy but margin is too high.”

With new lot sizes:

• Smaller accounts can participate responsibly

• Better position sizing becomes possible

 

Does This Affect Existing Open Positions?

❌ No

• Existing contracts retain old lot sizes

• Only new contracts (Jan 2026 onward) will use revised lots

• There is no forced adjustment to your current trades

 

Will Option Prices Change Because of Lot Size?

❌ Option premium per unit stays the same

Only total P&L per contract changes because:

Market dynamics, Greeks, IV — all remain unchanged.

 

Strategic Adjustments Traders Should Make

🔹 Update Your Risk Calculations

If you risk 1% per trade:

• Recalculate position size using new lots

🔹 Rebuild Backtests

• Old backtests using fixed lots will be misleading

• Always normalize to rupee risk, not lot count

🔹 Avoid Over-Leveraging

Smaller lots ≠ take more trades blindly

Common Myths About Lot Size Changes

❌ “This is bad for option sellers”

➡️ False
It actually reduces risk concentration

❌ “Market volatility will fall”

➡️ False
Volatility is index-driven, not lot-driven

❌ “Profits will disappear”

➡️ False
Returns normalize — discipline improves

Long-Term Impact on Indian Derivatives Market

✅ Healthier participation
✅ Lower blow-up risk
✅ Better retail survival rate
✅ Improved market stability

This is a structural improvement, not a restriction.

Final Verdict: Is This Change Good or Bad?

Short answer: GOOD — if you trade smart.

The NSE’s upcoming lot size revision:

• Encourages disciplined trading

• Reduces forced over-exposure

• Aligns India with global derivatives best practices

Professional traders already trade based on rupee risk, not lot obsession.
This change nudges retail traders in the same direction.

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Note: Please do your own research and make investment. Moneycontain will not be responsible for any of your losses at all. The point made is for educational purpose only and intended to give information. All investments are subject to risks, which should be considered prior to making any investments.

Frequently Asked Questions (FAQ)

Q1. When will the new lot sizes apply?

For contracts expiring after December 30, 2025 (January 2026 onwards).

Q2. Will my current positions be affected?

No. Existing contracts remain unchanged.

Q3. Will margin reduce?

Yes, proportionally to the lot size reduction.

Q4. Is this good for beginners?

Absolutely. Lower risk per contract improves learning survival.

Q5. Does this apply to stock options?

No. This update is only for index derivatives.

Learn More Here

Best Broker for Nifty & Bank Nifty Options Trading in 2026 (My One Clear Pick)

Ultimate Options Trading Guide for Beginners (2026) – Step-by-Step Mastery

 

Disclaimer

This article is published for educational and informational purposes only and should not be construed as investment advice, trading advice, or a recommendation to buy or sell any securities, derivatives, or financial instruments.

Index option lot sizes, margin requirements, contract specifications, and exchange rules are subject to change as per NSE, SEBI, and clearing corporation guidelines. Readers are advised to verify all details from official exchange circulars or their registered stock broker before taking any trading decisions.

Options trading involves significant risk and may not be suitable for all investors. Past performance, examples, and illustrations used in this article do not guarantee future results. Trading outcomes depend on market conditions, risk management, and individual decision-making.

The author and the website do not accept any liability for losses, damages, or actions taken based on the information provided in this article.

Always consult a SEBI-registered financial advisor or conduct your own due diligence before engaging in derivatives trading.