Glossary
What is Expiry? Meaning, Example & Why It Matters
The date on which a futures or options contract ends and is settled according to exchange rules.
Every futures and options contract has an expiry date. After that date the contract no longer exists. Exchanges set expiry schedules, with monthly contracts for most stocks and additional expiries for some index contracts. SEBI has revised rules on how many weekly expiries exchanges can offer, so schedules can change.
Why Expiry matters to you
As expiry approaches, option premiums lose time value quickly, and prices can become very sensitive to small moves in the underlying. Expiry days often see heavy trading volumes and sharp swings, which can be risky for traders with leveraged or short option positions. Margins may also increase close to expiry.
At expiry, index options and futures are usually cash settled, while stock derivatives in India are physically settled. Physical settlement means an in-the-money stock option or an open stock futures position can result in you having to take or give delivery of actual shares, which needs full funds or shares in your account.
Practical tip: know the exact expiry date and settlement type of every contract you hold. If you do not want physical delivery of shares, close stock F&O positions before your broker's cut-off, which is often a day or two before expiry.
See it in rupees: every charge and tax on a real trade, at every broker. Open the brokerage calculator
Related terms
- GlossaryOptions
A contract giving the buyer the right, but not the obligation, to buy or sell an asset at a set price before expiry.
- GlossaryFutures
A contract to buy or sell an asset at a fixed price on a future date, traded in standard lot sizes.
- GlossaryOption Premium
The price an option buyer pays to the seller for the rights the option contract provides.
- GlossaryF&O (Futures and Options)
The derivatives segment where traders buy and sell futures and options contracts based on stocks or indices.
Frequently asked questions
What happens if I hold an option until expiry?
If it is in the money, it is settled per exchange rules; if out of the money, it expires worthless. Stock options may involve physical delivery.
Why do brokers close positions before expiry?
Some brokers square off stock F&O positions early to manage the risk and funding needs of physical settlement.
Are expiry days more volatile?
Often yes, because many positions are being closed or rolled over, which can cause sharp price moves.