This study has been undertaken to make an empirical investigation of volatility effects of index options trading on the underlying spot index. In order to achieve the objectives of the study, the researchers have taken relevant intraday data of underlying spot index from the national stock exchange of India (NSE). The reference period of the study comprises of twelve years from 1995 to 2006 and the Sample Index is S&P NIFTY-50.After the thorough analysis, the findings put forth by the study confirm that the introduction of index options contracts on the sample index has resulted into increased volatilitythroughout post-derivatives period compared to pre- derivatives period.