F&O expiry day: what moves and why
Futures and options (F&O) contracts have an end date: the expiry. On that day open positions are settled, and the trading around it can make expiry days unusually volatile.
When contracts expire
On NSE, Nifty's monthly contracts and stock F&O contracts expire on the last Tuesday of the month, and Nifty also has weekly contracts expiring on Tuesdays. When the expiry day is a holiday, it moves to the previous trading day. BSE's Sensex contracts expire on a different day of the week. SEBI and the exchanges have changed expiry days several times, so check the exchange's current schedule.
How contracts are settled
- Index F&O (Nifty, Bank Nifty) is cash-settled: the profit or loss is paid in cash at the final settlement price.
- Stock F&O is physically settled: if you hold an in-the-money position at expiry, you must take or give delivery of the shares, which needs the full money or shares. Many traders close or roll positions before expiry for this reason.
Rollover
Traders who want to keep a position close the expiring contract and open the next month's: a rollover. The share of open positions rolled into the next series is watched as a sign of how confident traders are in the trend.
Why expiry days are volatile
- Options lose their remaining time value fast on the last day, so prices of near-the-money options swing sharply.
- Large positions are closed or hedged in the final hours, which can push the index towards levels where many options sit ("max pain").
- Volumes are much higher than on normal days.
Expiry days also mark the start of a new series, and index changes (like Nifty rebalancing) often take effect around them.
For education only. Not investment advice; My Market Desk is not a SEBI-registered investment adviser. Rules and timings change, so check the exchange or regulator for the current position.