FnO or Future Options come under the category of derivatives market segments. In comparison to the general equity market, FnO market is full of ample opportunities. Though both buyers and sellers have to maintain some of the rights and obligations, still the particular market is always in a high demand. In our previous context, a broad discussion regarding the future and options market was given. You may check it out once to get a basic overview of the FnO market. Today we are going to share more information about the market, the FnO expiry date. So, after stating a brief note about the features of future-options, we will go for the answer to What is FnO Expiry Date in Stock Market?
Futures and Options
In the future contract, underlying assets are traded at a predetermined price and time. Here, in this contract, both the buyers and sellers are obligated to execute the transaction process within the time limit. The level of risk is much high.
The options contract is almost similar to the future contract, based on underlying assets. There is some core distinction between future and options. Here, buyers are not obliged to execute the contract while sellers are. Hence, it is less risky in comparison to the future contract. Unlike the futures contract, options traders have to pay a minimum premium for the transaction process.
What is FnO Expiry Date in Stock Market?
Just like other trade options, FnO also consists of certain rules and regulations. Future and options have the following common features such as buyers, sellers, price, and expiry. As you know this article covers the entire discussion of FnO Expiry.
Literally, the term “expiry” represents an end of a validity period. In the future-options contract, the feature “expiry” carries the same meaning. The term “Expiry date” in FnO indicates the last valid day of the derivatives. On that day, the trade position must be settled between buyers and sellers.
Which Day is Considered as the Expiry Day?
According to the Exchange rules, last Thursday of the Contract month is considered as the FnO expiry day. In order to make the concept clear, let’s have a look at the following example:
Suppose, there are three future contracts in the Nifty50 index, Jan, Feb, and March. After meeting the expiry date in the last Thursday of Jan, the Jan contract will be expired. After that, a new contract April will be introduced.
Now, the question is if the last Thursday of any month is declared as NSE holiday, then what happens to the expiry date? The expiry date will postpone to the very next day.
Is Carry Forward of a Future-Options Contract is Possible?
In future-options trading, traders can roll-over the contract to the next month. For that, they need to square off the contract first before expiry and after that carry forward the order to the next month.
As I have mentioned earlier that in the future contract both buyers and sellers have obligations while in the options, only sellers are obliged. Hence, a future order has to be settled down before or on the date of expiry. Options can also be canceled. Therefore, the expiry date plays quite a significant role in the derivatives market. This article “What is FnO Expiry Date in Stock Market?” helps traders to clear the conception regarding future-options trading.
Ankita is a graduate in English language and she has also done her MBA from the Calcutta University. She has a high knack in the stock markets. An experienced stock market content writer Ankita is also trading on her own account. Ankita is also preparing for the NISM Research Analyst Series XV examination seriously.
Categories: Stock Market Basics