How Jane Street Outsmarted The Street And Made Billions

Jane Street, the global trading powerhouse known for its brainy algorithms and lightning-fast execution, has found itself in hot water with SEBI. Turns out, they weren’t just trading smart, they were allegedly trading too smart for India’s markets.

So, what exactly did they do?

SEBI’s investigation revealed that Jane Street’s India-linked entities were running a very slick play on weekly index options expiry days, particularly in Bank Nifty, which sees massive volumes every Thursday.

Here’s how it worked, with one clear example.

Take January 17, 2024—a Wednesday, but also the expiry day for weekly Bank Nifty options. That morning, the market opened with a sharp drop because HDFC Bank’s quarterly results had disappointed investors the previous evening.

Now, in a falling market, you'd expect prices to keep sliding. But Jane Street did the opposite of what most would do: they went shopping.

Between 9:15 AM and 11:45 AM, Jane Street aggressively bought over ₹43 billion worth of Bank Nifty constituent stocks and their futures. This huge buying spree propped up the index, even though the broader sentiment was bearish. To an average trader looking at the screen, it looked like the market had found support and was rebounding.

But behind the scenes, Jane Street was executing the real play.

At the same time, they were quietly placing massive bearish bets in the Bank Nifty options market. They were buying puts, which rise when the market falls, and selling calls, which lose value if the market doesn’t go up. And because their own stock buying had temporarily pushed the index up, they got those puts cheap and sold the calls expensive.

Then came Phase Two.

After 11:45 AM, Jane Street reversed their strategy. They dumped all the stocks and futures they had bought earlier. This aggressive selling caused the index to fall again, sharply this time, just as options contracts were approaching expiry.

The result?

Their bearish options trades made a killing, because the market fell exactly when it needed to. And while they booked some losses on the stock and futures positions they had bought earlier, the profits from options trades more than compensated for it.

On just that one day, January 17, Jane Street reportedly made ₹7.35 billion in profits, largely from this expiry-day manoeuvre. SEBI’s detailed trade analysis showed that Jane Street’s trades alone caused most of the morning’s artificial rise in Bank Nifty, and their later reversal triggered its sharp fall.

And this wasn’t a one-off. SEBI found at least 15 such days where a similar pattern played out: aggressive buying to move the index up, placing opposite bets in options, and then selling everything to push the market down before expiry.

Over a two-year period, Jane Street’s operations in India made over ₹430 billion in profits from index options. At the same time, they posted losses of about ₹76 billion in stocks and futures. The net result? Roughly ₹360 billion in profit, mostly built on expiry-day strategies like the one on January 17.

The scale, timing, and consistency of these trades made SEBI conclude that this was no coincidence. Despite warning Jane Street in early 2025 to refrain from these kinds of trades, the group continued until the regulator stepped in.

SEBI barred them from accessing the Indian securities market, froze ₹48.4 billion of what it called “unlawful gains”, and said further investigation was underway.

In short: Jane Street allegedly used its capital, speed, and strategy to create false signals in the market, luring thousands of retail traders into bad bets, while it quietly profited. It worked for a while until the SEBI caught on. 

To be sure, this is an interim order by SEBI and Jane Street told Reuters it disputes the findings and will further engage with the regulator. "Jane Street is committed to operating in compliance with all regulations in the regions we operate around the world," the firm said.

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