When contracts expire
NIFTY has a weekly expiry, and monthly index and stock contracts expire on the last expiry day of the month. If that day is a holiday, contracts expire on the previous trading day. See the F&O expiry calendar for exact dates.
Index F&O: cash settled
NIFTY, BANKNIFTY and other index contracts are settled in cash at the official closing value of the index. Futures are marked to that price. In-the-money options are settled for their intrinsic value; out-of-the-money options expire worthless.
Stock F&O: physically settled
Stock futures and in-the-money stock options that are held to expiry are settled by delivery of shares. A long future or an ITM long call means you take delivery (and pay the full value); a short future or ITM long put means you deliver shares. Brokers usually ask traders to close or roll such positions before expiry, and may charge higher margins in the last days.
Things to know
- Option time value shrinks fastest in the final days and hours.
- Open interest of the expiring series drops to zero after settlement; new positions move to the next expiry.
- Charges such as STT on exercised options can be higher than on options squared off before expiry — check with your broker.
Lot sizes for every contract are on the F&O lot size list.