Every option contract has an expiry: the last day on which it trades and the day its final value is settled. After expiry the contract no longer exists. Whatever time value it had is gone, and it is worth only its intrinsic value: how far in the money it ended. Choosing an expiry is as important as choosing a strike, because time is one of the things you are paying for (as a buyer) or being paid for (as a seller).
Weekly and monthly expiries in India
Indian exchanges list options with different expiry cycles:
- Weekly index options. A new contract expires every week. At the time of writing NSE offers weekly options on NIFTY and BSE on SENSEX; the list of indices with weekly contracts has been cut back by SEBI rules in recent years, so check the current list on the exchange.
- Monthly index options. Each index also has a monthly contract that expires in the last week of the month. NIFTY, BANKNIFTY, FINNIFTY and other indices have monthly series.
- Stock options. Only monthly expiries, on the same day as the monthly index contracts.
- MCX commodity options. Options on commodity futures (gold, silver, crude oil, natural gas), each with its own monthly expiry a few days before the futures contract it is based on.
The weekday of expiry is set by each exchange and has been changed several times; when it falls on a market holiday, expiry usually moves to the previous trading day. Always check the current calendar on NSE, BSE or MCX rather than relying on memory. ScreenerCharts follows the current and next three expiries for indices with weekly options, and the current and next month for monthly index, stock and commodity options.
What happens on expiry day
- Trading continues until the close: 15:30 for NSE and BSE equity options; for MCX, the session times on the expiry day are set by the exchange.
- A final settlement price is fixed for the underlying, based on the closing price (for indices, the official closing value).
- In-the-money options are exercised automatically. You do not need to do anything. Out-of-the-money options expire worthless.
- Index options settle in cash: the buyer receives (and the seller pays) the intrinsic value times the lot size.
- Stock options that end in the money settle physically: call holders must take delivery of shares and put holders must deliver them, with the full value of the shares, not just the margin. Brokers often close such positions early or ask for extra money in the last days; check your broker's policy and the physical settlement guide.
A worked example: settlement in rupees
You hold one lot of the NIFTY 25,000 call, bought at ₹90, with a lot size of 75 (check the current figure on NSE). NIFTY's closing value on expiry day is 25,180.
- Intrinsic value at expiry: 25,180 − 25,000 = 180 points.
- Settlement credited: 180 × 75 = ₹13,500.
- Your profit: (180 − 90) × 75 = ₹6,750, before brokerage and taxes.
If NIFTY had closed at 24,960, the call would expire worthless and you would lose the ₹6,750 premium. The 25,000 put seller in the same market would keep their full premium in the first case and pay 40 points per unit in the second. Note that settlement is based on the official closing value, not the last price you happened to see on screen.
Why decay speeds up near expiry
Time value does not shrink in a straight line. An at-the-money option's time value falls roughly with the square root of the time left, so the last few days take a much bigger bite than the first few weeks. A weekly option might lose a third of its value on expiry day alone, while a monthly option with three weeks left barely notices one day passing.
The NIFTY ATM straddle chart shows this clearly. On days far from expiry it moves gently; on expiry day it often slides steeply from the open as time value runs out:
Check how many days are left to the expiry shown, and compare the shape of the line with other days on the straddle page. The closer to expiry, the faster the decay on quiet days, and the more violent the jumps on busy ones, because gamma also rises as expiry nears.
How the expiry changes the expected move
The straddle price for an expiry is the market's estimate of how far the price can travel by that date. A nearer expiry has less time and a smaller expected move; a further one has more:
The range shown is for the expiry named in the box. A monthly expiry three weeks away will usually show a range two to three times wider than a weekly expiry two days away, because uncertainty grows with time.
Weekly or monthly: the trade-offs
| Feature | Weekly (near expiry) | Monthly (more time) |
|---|---|---|
| Premium | Low | Higher |
| Time decay per day | Fast, very fast near the end | Slow at first |
| Reaction to price moves (gamma) | Sharp | Gentler |
| Room for a view to work | Days | Weeks |
| Typical users | Intraday traders, sellers of decay | Swing traders, hedgers |
Neither is safer. Weekly options can double or go to zero in an hour. Monthly options cost more, so a wrong view still loses real money, just more slowly. A practical check is to match the expiry to the time your idea needs: a view that may take two weeks to play out does not fit an option that expires in two days.
Rolling a position to the next expiry
If you want to keep a position beyond the current expiry, you close it and open the same position in a later expiry. This is called rolling. Hedgers holding NIFTY puts, for example, often roll them every month. Rolling costs brokerage and spread twice, and the new option will cost more because it has more time left. Futures traders do the same each month; see futures rollover.
Common mistakes around expiry
- Comparing premiums across expiries. A ₹60 weekly option and a ₹180 monthly option at the same strike are not "cheap" and "expensive"; they have different amounts of time.
- Holding stock options into expiry by accident. Physical settlement can require the full value of the shares.
- Buying cheap options on expiry morning. Their low price reflects how little time is left.
- Selling options on expiry day without a stop. Gamma is at its highest, and a 1% move can multiply a small premium many times. The expiry day trading guide covers this.
- Assuming the expiry weekday. It has changed before and can change again.