Contract cycle
Also written Contract trading cycle · Trading cycle
The period over which a derivative contract trades, and the set of expiries available at once — for NSE stock and index futures, a three-month cycle of near, next and far months.
In plain language
Derivatives are not open-ended. Each contract has an expiry, and at any time the exchange offers only a fixed set of expiries to choose from. That set, and how it rolls forward, is the contract cycle.
The workbook defines it as the period over which a contract trades.
For index and stock futures on NSE, it is a three-month trading cycle. On any day, three contracts trade: the near month, the next month and the far month. When the near month expires, a new far month is introduced on the next trading day, so there are always three.
Stock options on NSE follow the same three-month cycle. Index options are offered across a much wider range of expiries — weekly, monthly, quarterly and long-dated half-yearly.
How it works
The cycles the workbook gives:
| Contract | Cycle |
|---|---|
| NSE index and stock futures | 3 months: near, next, far |
| NSE stock options | 3 months: near, next, far |
| NSE index options | Weekly and monthly, plus 3 quarterly expiries (Mar, Jun, Sep, Dec) and 8 half-yearly (Jun-Dec cycle) after them |
| BSE Sensex futures | 7 serial weekly and 3 serial monthly (per the specification table) |
| BSE Sensex options | 7 serial weekly, 3 monthly, 3 quarterly and 8 semi-annual |
Regulatory changes that shape the cycle:
- SEBI circular of 1 October 2024, effective 20 November 2024: each exchange may offer weekly expiry on only one benchmark index.
- SEBI circular of 26 May 2025: each exchange chooses Tuesday or Thursday as its expiry day; all other equity derivatives, including benchmark index futures, must have a minimum 1-month tenor and expire on the last Tuesday or Thursday of the month. NSE chose Tuesday; BSE chose Thursday.
A worked example
NSE futures on 3 October 2025 (the workbook's example):
| Contract | Expiry |
|---|---|
| Near month | October 2025 — last Tuesday, 28 October 2025 |
| Next month | November 2025 |
| Far month | December 2025 |
On 28 October 2025 the October contract expires and all open positions are compulsorily settled. On the next trading day a January 2026 contract is introduced, restoring the three-month cycle: November, December, January.
A trader long October Nifty futures who wants to stay long must roll over — sell October and buy November at the same time.
The weekly layer for index options (the workbook's older example of 10 May 2023): weekly Nifty options expiring 11 May, 18 May, 1 June and 8 June, plus monthly options expiring 25 May, 29 June and 27 July. The four weekly dates skip 25 May, because that week is covered by the monthly contract.
Why NISM asks about it
Chapter 3, section 3.3 (Contract specifications of futures contracts), defines contract cycle, expiration day and roll-over, and gives the BSE Sensex futures table. Chapter 4, section 4.2, gives the option cycles, the weekly-expiry restriction and the Sensex options table. Expect "how many contracts trade at a time" and "which day do NSE contracts expire".
Common exam traps
- NSE futures: three contracts at a time — near, next and far.
- NSE expiry is the last Tuesday; BSE chose Thursday. Older material with Thursday expiries for NSE is stale.
- The workbook contradicts itself on BSE Sensex futures. Its Chapter 3 specification table lists 7 serial weekly and 3 serial monthly Sensex futures, while the SEBI measures on the facing page say benchmark index futures must have a minimum 1-month tenor and only one benchmark index options contract may be weekly. Learn the SEBI rule, and check the exchange website for current specifications as the workbook itself advises.
- In Chapter 3 the workbook says the contract introduced after the October 2025 expiry is "January 2025" — read it as January 2026.
- Only one benchmark index may have weekly expiry per exchange, from 20 November 2024.
Where this is taught
Free preparation for NISM Series IVRelated terms
- Final Settlement PriceThe price at which a commodity derivative is finally settled at expiry — a simple average of the polled spot prices of the expiry day and the two days before it.
- Futures contractA standardised forward traded on an exchange, where the exchange fixes every term except the price and the clearing corporation guarantees settlement, so neither side carries the other's default risk.
- Calendar spreadA long position in futures of one maturity and a short position in futures of another maturity on the same underlying. It is a bet on the price gap between the two months, not on market direction.
- Contract specificationsThe terms of an exchange-traded derivative that the exchange fixes in advance — underlying, lot size, contract cycle, expiry day, tick size, settlement prices, trading hours — everything except the price.
- Expiration dayThe last trading day of a derivative contract, on which it ceases to exist and all open positions are compulsorily settled — the last Tuesday of the month for NSE contracts, the last Thursday for BSE.
- RolloverCarrying a derivatives position past expiry by closing the expiring contract and opening the same position in the next series simultaneously — the only way to hold a view longer than one contract cycle.
- Expiry dateThe last trading day of a currency futures or options contract — for monthly contracts, two working days before the month's last business day; for weekly, every Friday — with trading stopping at 12.30 pm.