Expiration day
Also written Expiry day
The 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.
In plain language
Every futures or options contract has a birthday and a last day. The expiration day is that last day — the day the contract stops trading and stops existing.
On expiration day, every open position in that contract is compulsorily settled. Nobody gets to just let it run. A trader who wants to keep the position going into the next month has to actively roll it over: for a long position, that means selling the expiring contract and buying the next one, both legs executed at the same time.
How it works
Which weekday is expiration day depends on the exchange, following a SEBI circular of 26 May 2025 requiring each exchange to fix a single expiry day:
- NSE has chosen Tuesday: Nifty, Bank Nifty and single-stock monthly futures all expire on the last Tuesday of the month (or the previous trading day, if that Tuesday is a holiday).
- BSE has chosen Thursday: BSE Sensex and BSE Bankex monthly contracts expire on the last Thursday of the month.
- Each exchange may run only one weekly benchmark index options contract, expiring on its own chosen day; all other monthly contracts must have a minimum one-month tenor and expire on that same day.
- Changing the expiry day requires prior SEBI approval.
On expiration day, the final settlement price is the closing price of the underlying in the cash segment that day — not the futures price. A new contract for the next cycle is introduced on the trading day following the expiring contract's expiration day.
A worked example
The October 2025 Nifty futures contract trades until Tuesday, 28 October 2025 — its expiration day, the last Tuesday of October. All open October-series Nifty futures positions are compulsorily settled that day at the closing spot value of the Nifty.
A trader who wants to stay long into November must, on or before 28 October, sell the October contract and simultaneously buy the November contract — the roll-over. If she does nothing, her October position is closed out by compulsory settlement and she has no futures exposure in November at all.
By contrast, a BSE Sensex futures contract for the same month expires on the last Thursday, a different calendar day from the Nifty contract even though both are "monthly" contracts — because NSE and BSE have chosen different expiry days.
Why NISM asks about it
Chapter 3, section 3.2, defines expiration day among the key contract-specification terms and gives the NSE (Tuesday) versus BSE (Thursday) split following the May 2025 SEBI circular, plus the Nifty worked example dated 28 October 2025. Expect a question testing whether you know which exchange has chosen which expiry day, and what "roll over" means in practice.
Common exam traps
- NSE expires on Tuesday; BSE expires on Thursday — these are not interchangeable, and a question naming one exchange with the other's day is wrong.
- All open positions are compulsorily settled on expiration day — a trader cannot choose to simply not settle.
- Rolling over means closing the expiring contract and opening the next one at the same time, not just letting the old one lapse and separately deciding later to open a new one.
- A new contract is introduced on the trading day after the previous one's expiration day, keeping the trading cycle continuous.
Check yourself
1.According to the workbook's specification table for options on the BSE Sensex, what is the contract size?
- a)50
- b)25
- c)15
- d)20
Show the answer
Answer: (d) 20
The workbook's table for BSE Sensex options lists: contract size 20, tick size Rs. 0.05, trading hours 9:15 a.m. to 3:30 p.m., exercise style European, and final settlement: cash settlement based on the closing price of the underlying index on the expiration day.
Option A, 50, is the lot size the workbook supposes for Nifty options in its worked examples (for instance, ₹124.50 × 50 = ₹6,225). The workbook introduces the Sensex table precisely because Sensex options have slightly different specifications as compared to the Nifty option contracts.
Options B and C are not figures the workbook gives for Sensex options. The workbook also notes that one should refer to the exchange website for any change in the product specification.
Where this is taught
Free preparation for NISM Series VIIIRelated terms
- Daily Settlement PriceThe price at which every open futures position is marked and reset at the end of each day — the last 30 minutes' volume weighted average price of that contract, computed separately for each expiry.
- 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.
- Contract cycleThe 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.
- Physical settlementSettling a derivative on expiry by actual delivery of the underlying shares against payment. In India, all stock futures and options open at expiry have been physically settled since October 2019.
- 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.