When a derivatives contract expires in India, trading in that contract ends and its open position is settled under the rules for that exchange, instrument and underlying. Some positions are settled in cash; certain stock and commodity contracts can require delivery. Expiry does not mean every contract is automatically paid out in the same way.
How settlement differs by contract
| Contract type | What expiry generally means | What to check |
|---|---|---|
| NSE index futures | The final profit or loss is settled in cash and the position ceases to exist. | The exchange’s final settlement price for the index. |
| NSE index options | Options in the money at expiry are automatically exercised; settlement is monetary, not delivery of index shares. | Whether the option is in the money at the exchange’s settlement reference. |
| NSE individual-stock futures and options | Individual-security derivatives can result in physical delivery and related funds obligations. | Delivery and margin requirements, and the exact contract’s settlement instructions. |
| NSE INR currency derivatives covered by its specifications | Cash settlement in Indian rupees; the listed contracts do not imply delivery of currency. | The product’s settlement calendar and current exchange instructions. |
| Commodity derivatives | Cash settlement applies to some amounts, but specified contracts can involve physical delivery. | The commodity’s delivery terms, tender window, margins and settlement dates. |
These distinctions follow the relevant SEBI, NSE and NSE Clearing material; they are not a rule for every Indian exchange or every contract. Confirm the exact exchange and contract specification before acting.
What happens to futures at expiry?
NSE equity index futures
NSE’s equity-derivatives settlement mechanism says index futures are marked to the final settlement price on expiry. The resulting profit or loss is settled in cash, after which the futures position ceases to exist. NSE’s settlement-price rule specifies the closing price of the relevant underlying index in the capital-market segment on the contract’s last trading day as the final settlement price.
Other futures
Do not assume the index-futures process applies to every future. NSE’s covered INR currency futures use cash settlement in rupees. Commodity futures can have daily and final mark-to-market cash entries, while specified contracts may also require delivery under their product-specific terms.
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What happens to options at expiry?
Index options
SEBI describes an option as giving its buyer or holder a right, but not an obligation, to buy or sell the underlying at a predetermined price within or at the end of a specified period; the writer has an obligation under the contract terms. For NSE equity options, the exchange says options are European style and automatically exercised at expiry if they are in the money at the close. Long in-the-money positions are allocated to short positions in the same option series on a random basis. For index options, exercise settlement is cash: the holder does not receive the index’s constituent shares.
Use the exchange’s final settlement reference to establish moneyness. A last traded price is not necessarily that reference, and an option that is out of the money at the relevant close does not produce the same exercise outcome as one that is in the money.
Individual-stock options
Stock options need separate attention. NSE’s individual-securities F&O product information specifies physical settlement for stock options, so an in-the-money position can lead to share delivery or a funds obligation depending on the position and resulting settlement. Do not apply the cash-settlement description for index options to an individual-stock option.
NSE’s general equity settlement-mechanism page describes option exercise settlement as cash settled, while its individual-securities page specifies physical settlement for stock derivatives. Read the product-specific physical-settlement rule together with the applicable current clearing instructions; the general overview alone does not resolve the stock-delivery process. SEBI’s 30 November 2022 circular, “Net Settlement of Cash segment and Futures & Options segment upon expiry of stock derivatives,” addresses the relationship between stock-derivative expiry and cash-segment settlement. Exact cash and delivery accounting should be checked against the current rules for the contract and exchange.
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Currency and commodity contracts have their own rules
NSE INR currency derivatives
NSE’s specifications for the INR-pair products covered by that page state that they are cash settled in Indian rupees. NSE’s currency settlement mechanism describes final settlement of expiring futures as cash settlement and lists T+2. That page was last marked updated in 2023, so treat the timing as a published operational reference rather than a guarantee for every product or a substitute for checking the current calendar.
Commodity derivatives
Commodity settlement depends on the particular contract. NSE Clearing says in-the-money commodity options are automatically exercised unless the holder submits a contrary instruction; out-of-the-money options expire worthless. Depending on the contract, an exercised option may devolve into a futures position. Open positions in contracts designated for compulsory delivery may need to be delivered.
Delivery margins, tender windows, pay-in dates and the consequences of failing to meet an obligation are product specific. Read the relevant delivery and settlement procedure well before expiry; a generic statement that commodity derivatives are cash settled is not enough to establish what a particular position requires.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.When is expiry day?
Expiry day depends on the exchange and contract and can change by circular. NSE’s equity contract-specification page, updated 11 August 2026, lists Tuesday conventions for the covered equity derivative contracts; if Tuesday is a trading holiday, expiry moves to the preceding trading day. This is a rule for the contracts covered by that NSE page, not a universal Indian-market expiry weekday.
What to check before expiry
- Identify the contract: confirm the exchange, symbol, underlying, instrument, option type, strike and expiry series.
- Distinguish the underlying: establish whether it is an index, an individual security, a currency pair or a commodity.
- Read the contract-specific settlement terms: determine whether settlement is cash, physical, or can involve both delivery and funds obligations.
- For an option, check moneyness against the official reference: do not rely on an assumed last traded price.
- For stock and commodity positions, review delivery and margin requirements early: check the applicable settlement calendar and any tender or pay-in dates.
- Confirm your broker’s instructions: cutoffs, position handling, charges and account requirements are provider-specific; the official material cited here does not establish one universal cutoff or charge schedule.
NSE’s equity settlement-mechanism page describes final settlement amounts as T+1, with T as expiry day. That page, like the currency settlement page, was last marked updated in 2023. Verify current exchange circulars, the contract calendar and broker instructions rather than treating those published timings as universal or necessarily unchanged.
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