How the weight of each bank is determined in this notebook?

Options & Futures
1

Course Name: Options Trading Strategies In Python: Advanced, Section No: 2, Unit No: 6, Unit type: Notebook



I would like to know the type of data needed to calculate the weight and lot_size and practice doing it myself. Can someone elaborate a bit more or perhaps update the notebook with a better explanation to help learners like me learn better? Thanks

2

Hi Scoodood,

The weights of the individual stocks are determined based on the weightage each stock accounts to in the respective index.



However, do note that this weightage keeps changing with time and hence, I have shared along a few links that can help you get the updated distribution of weights of individual stocks that are included in the indices Nifty and NiftyBank.



The lot_size is set to the minimum number or ticket size of shares that you need to buy/sell while making a Futures or Options transaction. This is generally set by the exchange itself.



I hope this helps.

3

Hi Kevin, thanks for explaining these magic numbers. A small suggestion to help learners learn better is to include the original PDF related to the dataset used at the time, followed by detailed steps to derive/extract the number. Not only will this significantly help us learn the precise steps to verify the numbers in the exercise, but we will also be able to handle the task when given a different dataset.



The link given in the revised Jupyter notebook only shows the lot size of the BankNifty, while the rest were missing. After googling it, I also discovered that the lot size for the HDFCBANK, ICICIBANK, KOTAKBANK, SBIN, and AXISBANK differs from the web. There is more than 1 number as well, so I am still not sure how to verify these numbers. For your reference, the magic numbers from the Jupyter notebook exercise are included in below.



Best regard

HDFCBANK_Wt = 0.333
HDFCBANK_Lot_Size = 500

ICICIBANK_Wt = 0.173
ICICIBANK_Lot_Size = 2500

KOTAKBANK_Wt = 0.123
KOTAKBANK_Lot_Size = 800

SBIN_Wt = 0.102
SBIN_Lot_Size = 3000

AXISBANK_Wt = 0.08
AXISBANK_Lot_Size = 1200

BankNifty_Wt = 1.0
BankNifty_Lot_Size = 40
4

Hi Scoodood,

Thanks for your suggestions.

We have once again updated this notebook with a better explanation for the same.



We're sure that it will help all who will be visiting this notebook unit. Thanks once again!