How did a global firm like Jane Street allegedly make over ₹735 crore in a single trading day on Indian stock markets?
The answer lies in a controversial trading strategy that shook up Dalal Street and caught the attention of SEBI, India’s market watchdog. If you trade in Bank Nifty or Nifty 50 options, this is one story you need to understand.
Let’s break it down in simple terms.
What Happened on 17 January?
On 17 January 2024, Jane Street reportedly generated a profit of ₹735 crore on a single expiry day.
SEBI later alleged this was part of a pattern of index manipulation that spanned multiple expiry days using Bank Nifty and Nifty 50 derivatives.
The core idea? Drive the index price up artificially, profit from shorting options, and exit before the market realizes what happened.
Understanding the Alleged Strategy
Here’s how Jane Street’s strategy allegedly worked, simplified for Indian F&O traders:
Step-by-Step Breakdown
- Buy heavily in Bank Nifty/Nifty futures and stocks early in the morning
- Pushes the index upward
- Simultaneously sell (short) call options at higher strike prices
- Example: Sell 47,200 CE at ₹180 when Bank Nifty is around 47,000
- Price goes up temporarily due to heavy buying
- It appears like a bullish trend
- Exit positions before market close
- Index cools down naturally
- Call options expire worthless
- Profit = Premium collected from options
This type of expiry-day strategy utilizes timing and volume to capitalize on price sensitivity.
Why This Strategy Worked
- Expiry Day Volatility: The weekly expiry (every Thursday) on the NSE is volatile. Smart traders can influence movement.
- Liquidity Power: Jane Street allegedly utilized massive volumes to manipulate prices temporarily.
- Retail Confusion: Retail traders thought the move was genuine and joined the rally.
- Options Premium Decay: Time decay (theta) on expiry day favours option writers.
In short, Jane Street allegedly created a move, bet against it, and cashed in.
Is It Legal or Manipulative?
That’s the key question. According to SEBI’s July 2025 interim order:
- Jane Street’s actions distorted fair price discovery
- They created artificial volume and direction
- SEBI termed it “index manipulation.”
SEBI’s Actions:
- Banned Jane Street and affiliates from Indian markets
- Impounded over ₹4,843 crore in alleged gains
- The investigation is ongoing as of July 2025
Jane Street has denied wrongdoing and may challenge SEBI’s order.
Impact on Indian Stock Market
The ripple effects were massive:
- Angel One, BSE, CDSL, and Nuvama shares fell sharply
- Estimated ₹12,000 crore market cap wiped from broking ecosystem
- Increased fear in retail options traders
Broader Implications
- SEBI may now tighten F&O regulations
- Exchanges may deploy stricter surveillance on expiry days
- Calls for banning or limiting weekly options are growing
What Retail Traders Should Learn
This case serves as a wake-up call, particularly for retail traders using platforms such as Zerodha, Groww, Upstox, and Angel One.
Key Takeaways
- Avoid trading aggressively on expiry day
- Don’t unthinkingly follow early-morning trends
- Use stop losses and hedge your options
- Understand who is moving the market — it’s not always retail flow
Conclusion
Jane Street’s alleged strategy was bold, complex, and ultimately landed them in regulatory hot water. But it also revealed how fragile and easily influenced expiry-day price movements can be.
For the Indian retail trader, the lesson is clear: Don’t trade blind. Be informed. Trade smart.
How did Jane Street make so much in one day?
By allegedly manipulating index prices and shorting options that expired worthless.
Was this illegal?
SEBI considers it manipulative, but Jane Street has denied wrongdoing. The final verdict is pending.
Can this happen again?
Yes, unless stricter surveillance and reforms are implemented.
How can retail traders protect themselves?
Avoid expiry-day speculation, watch volumes carefully, and trade with risk controls.
Disclaimer
The information provided in this article is for educational and informational purposes only and does not constitute financial, investment, or trading advice. The content is based on publicly available sources and regulatory reports as of July 6, 2025. While efforts have been made to ensure accuracy, we do not guarantee the completeness or reliability of the information.
Readers are advised to consult a SEBI-registered financial advisor before making any trading or investment decisions. All examples mentioned are for illustrative purposes only. The author and publisher are not liable for any loss or damage arising from the use of this content.
Siddharth Suryavanshi is a finance enthusiast with over 8 years of hands-on experience in the stock market. Having served as a sub-broker at Motilal Oswal for 2 years, he brings in-depth knowledge and practical insights from the heart of the industry. Siddharth specializes in both technical and fundamental analysis, offering a well-rounded perspective on market trends and investment strategies.