In a notable change for the derivatives market, the National Stock Exchange (NSE) has shifted its F&O expiry to Tuesday, while the Bombay Stock Exchange (BSE) continues with the traditional Thursday expiry. This change creates a three-day cycle between Friday and Tuesday, which is being welcomed by traders, especially those focused on options strategies.
What is F&O Expiry and Why It Matters
F&O expiry refers to the last trading day of a futures or options contract, after which the contract becomes void. It’s a critical point for traders because it often brings volatility and increased trading activity.
With NSE’s new Tuesday expiry, traders now have more flexibility in planning and executing their trades.
More Time = More Strategy for Option Sellers
Market participants say that a Friday-to-Tuesday cycle gives traders a longer window to build and adjust their positions. This especially benefits option sellers, who earn through theta decay, i.e., the loss in value of options as they near expiry.
“The longer holding period allows sellers to capture more premium,” said one trader, pointing out that premium erosion (theta decay) works more effectively over weekends and extended holding periods.
Dual Expiry Days May Create New Opportunities
With two expiry days—Tuesday for NSE and Thursday for BSE—market participants now have dual opportunities in the same week. This opens up more trading strategies, arbitrage chances, and the ability to manage risk better.
Having expiry on two separate days gives traders a chance to split their positions or shift focus as per market sentiment.
What Traders Should Keep in Mind
While the shift can be a strategic advantage, traders need to stay alert about settlement dates, margin requirements, and liquidity conditions across both exchanges. Since each expiry has its own dynamics, traders should watch for volume trends and volatility spikes on both Tuesdays and Thursdays.
Final Thoughts
The NSE’s decision to move F&O expiry to Tuesday is seen as a smart move by many in the trading community. It adds flexibility, enhances strategy planning, and gives a slight edge to premium sellers. As both NSE and BSE now have different expiry days, traders may find more ways to optimise their trades and manage risk more effectively.
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