Markets regulator Sebi has decided to allow mutual funds to write call options subject to certain conditions.
Generally, call options refer to an agreement that gives a buyer the right to purchase an asset at a specified price within a particular time period.
Currently, mutual fund schemes are permitted to undertake transactions in equity derivatives but cannot write options or purchase instruments with embedded written options.
In a circular Wednesday, Sebi said mutual fund schemes (except Index Funds and ETFs) can write call options only under a covered call strategy for constituent stocks of Nifty 50 and Sensex indices.
