Weekly Expiry Days in Indian F&O Markets

Indian futures and options markets rank among the most liquid globally for exchange-traded derivatives. This phenomenon can be attributed to the increased participation of Foreign Institutional Investors (FIIs), Domestic Institutional Investors (DIIs), and, in recent years, retail investors.

This surge in participation prompted one of India’s oldest exchanges, the BSE, to launch its own derivatives operations in recent years. Consequently, Indian markets now offer expiry options every day of the week. This expanded flexibility allows institutions to effectively hedge their positions while enabling individual investors to take advantage of buying or selling opportunities for short-term gains.

This article briefly overviews the expiry days for various tradable contracts.

What is expiry day?

The expiry day of an F&O contract is the day on which it is due for settlement between the buyers and sellers of the contract. After the expiry day these contracts are either settled physically i.e the underlying security is delivered at the strike prices agreed upon or they are cash settled i.e the difference between the strike price and the price at which the underlying has expired is settled in cash between the buyers and sellers.

In Indian markets all stock options and futures contracts are physically settled i.e the underlying security is delivered. While all the index futures and options contracts are cash settled between the buyers and sellers.

What are the expiry days for NSE options derivatives?

There are four distinct contracts offered by the NSE that have weekly options expiry in the Indian markets. These contracts are MIDCAP NIFTY, FINNIFTY, BANKNIFTY, and NIFTY. Below are the weekly expiry days for each of these contracts.

Note:

• In the last week of the month, these same contracts also serve as monthly contracts. This is also the day when the futures contracts for these indices expire and settle.
• All index derivatives contracts in the Indian markets are cash-settled according to exchange regulations.

What are the expiry days for BSE options derivatives?

There are currently two indices for which BSE has a weekly options expiry available. These are the BSE BANKEX contracts which expire every Monday, and the BSE SENSEX contracts, which expire every Friday. 

What happens on the expiry day?

There are different scenarios which might play out on the expiry day. Below are the examples of the same for your better understanding-

Automatic Exercise:

Most exchanges automatically exercise options contracts that expire in the money (ITM). This means if you hold an ITM call or put option, you will be assigned the difference between the strike price and the last traded price in a cash-settled contract. 

For Out-of-the-Money (OTM) Options:

Options contracts that expire out-of-the-money (OTM) lose all their value and expire worthless. The premium paid for the option is forfeited.

Conclusion

Understanding expiry days is crucial for anyone trading F&O contracts in India. With the recent introduction of weekly expiry options, Indian markets offer exceptional flexibility for managing risk and capitalizing on short-term opportunities.

By familiarizing yourself with the specific expiry days for your chosen contracts you can make informed trading decisions and navigate the Indian derivatives market with greater confidence.