India Bank Options Hedging Costs Climb on RBI, Geopolitical Risk

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The cost of hedging against swings in a key Indian banking gauge relative to the broader market has surged, as traders brace for the central bank’s rate decision as well as a potential escalation in the Middle East war.

The gap between the implied volatility of the NSE Nifty Bank Index and the India NSE Volatility Index has widened to nearly eight points — the highest since December 2022 — signaling stronger demand for protection in rate-sensitive financial stocks.

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