What is an Expiry Date? A Simple Guide for Indian Traders

The expiry date is the last day a derivative contract is valid. After expiry, the contract is settled and ceases to exist. In India, index and stock derivatives have scheduled weekly or monthly expiries set by the exchanges.

Every derivative has a deadline called the expiry date. On this day the contract ends and is settled.

For options, expiry matters a lot because time decay speeds up as it nears. This explainer keeps the language simple and the examples Indian. You can track expiry data on Stockk.

Key Takeaways

• The expiry date is the last day a contract is valid.
• After expiry, the contract is settled and disappears.
• Time decay speeds up for options as expiry nears.
• Index options are cash-settled; many stock options settle physically.
• Traders square off or roll over to avoid unwanted settlement.

Why does expiry matter for options?

As expiry approaches, an option's time value decays faster. An out-of-money option can lose value even if the underlying barely moves, simply because time is running out. On the expiry day itself, only the real, in-the-money value remains. This is why timing around expiry is so important for both buyers and sellers.

What happens at expiry in India?

What you should do before expiry

If you hold a position close to expiry, you have three choices. Knowing them in advance avoids unwanted surprises like physical delivery.

• Close the position: square off to book your profit or loss and walk away clean
• Roll over: move to the next expiry if you still want the exposure
• Let it settle: only if you are ready for cash settlement or share delivery

Why expiry day is special

On expiry day, time value collapses toward zero within hours. Out-of-money options decay extremely fast, and premiums can swing sharply around key levels. Some sellers target this rapid decay, while buyers face brutal time decay. It is a high-activity, high-risk session that beginners should treat with care.

A note on expiry days

Index and stock derivative expiries are scheduled on fixed weekdays, but these schedules are revised from time to time by SEBI and the exchanges. Always check the current expiry calendar before planning a trade. Both weekly and monthly cycles exist.

Want to apply this? Trade futures and options on Stockk, open a free demat account, and keep exploring the Knowledge Center for deeper dives.

Futures and Options are leveraged products and carry a high risk of loss that can be more than the money you put in. This article is only for learning and is not a recommendation to trade in derivatives.

Frequently Asked Questions