How weekly expiry day works for NIFTY and SENSEX options

Weekly index options are among the most actively traded contracts in Indian markets. NIFTY options trade on the National Stock Exchange (NSE) and SENSEX options on BSE. Each weekly contract has a fixed expiry day, and that day behaves differently from the rest of the week. This article explains how expiry works, how the contracts are settled, and why expiry days often show the largest moves in an options strategy's daily P&L.

Which day the contracts expire

Every weekly index option series expires on a set weekday, after which it stops trading and a new series takes over. At the time of writing, weekly NIFTY options expire on Tuesday and weekly SENSEX options expire on Thursday. If the scheduled expiry day is a trading holiday, the contract expires on the previous trading day instead.

Expiry days are set by the exchanges under rules from the market regulator, SEBI, and they have changed several times in recent years. Before relying on a specific weekday, check the latest circulars on the NSE and BSE websites.

How index options are settled

NIFTY and SENSEX options are European-style and cash-settled:

• European-style means an option can only be exercised at expiry, not before. Traders who want to exit earlier sell the option in the market instead.
• Cash-settled means no shares change hands. At expiry, the exchange compares each option's strike price with the final settlement price of the index, and pays out the difference in cash.

An option that is in the money at expiry, meaning it has intrinsic value, is settled automatically for that value. An option that is out of the money expires worthless. The final settlement price is based on the index's closing value on expiry day, as defined by the exchange.

Exercised in-the-money options can attract different taxes and charges from options closed before expiry, which is one reason many traders square off positions during the session rather than letting them settle.

What happens to option prices during expiry day

On expiry day an option has hours, not days, of life left. That changes how prices behave:

• Time value collapses. Options that are far from the current index level lose almost all of their remaining value. Time decay, measured by theta, is at its fastest.
• Gamma is extreme. Options with strikes close to the index level swing quickly between being worth something and being worth nothing. A move of a few dozen points can change an option's value several times over.
• Volatility can shift fast. News during the session can move implied volatility, and with so little time left, price reactions are amplified.

Our article on the option Greeks for a hedged weekly position explains these sensitivities in more detail.

Why expiry days stand out in a P&L ledger

Because prices move so much on the last day, expiry often produces the largest single-day profit or loss in a weekly options strategy. A position that has gained steadily through the week can give much of it back in an hour, and the reverse can also happen. When reading a strategy's daily P&L, it helps to check which days were expiry days before drawing conclusions from one large number.

Expiry also affects positional strategies, which hold positions overnight, differently from intraday strategies, which open and close positions within the same session. A positional strategy may carry a position into expiry day; an intraday strategy starts each day flat. Both styles are listed on the strategy overview.

Practical points around expiry

A few practical details are worth knowing:

• Liquidity moves to the next series. As expiry approaches, trading activity shifts to the following week's contracts. Strikes far from the index can become thinly traded, which widens the gap between buying and selling prices.
• Margins can change. Exchanges and brokers can raise margin requirements close to expiry, and some margin benefits for offsetting positions are not available on expiry day itself.
• Execution matters more. With prices moving fast, the difference between the expected price and the actual fill, known as slippage, tends to be larger. This is one of the reasons individual results can differ from a published ledger, as explained in how to read a strategy's daily P&L ledger.
• Trading hours for both exchanges' equity derivatives run from 9:15 am to 3:30 pm IST, so all expiry-day activity happens within that window.

Summary

Weekly NIFTY and SENSEX options expire on fixed weekdays set by the exchanges, settle in cash against the index's closing value, and can only be exercised at expiry. On the final day, time decay and gamma reach their extremes, which is why expiry days frequently show the biggest movements in an options strategy's daily results. Checking the current expiry calendar on the exchange websites, and noting which days were expiry days, makes any options P&L record easier to understand.