What is Nifty Weekly expiry?

Posted by smartadmin on

Nifty weekly options contract specification takes place on a weekly basis – every Thursday. If the day (Thursday) falls on a trading holiday, the initial trading day will be the last trading day. On the expiry day, all contracts will expire at the closing time of the regular market.

What are the benefits of nifty weekly options contracts?

Posted by smartadmin on
  • Because of shorter maturity periods, weekly options command a lower premium. Thus, weekly options are more affordable than monthly options.
  • Traders can take bigger positions for similar capital outlay just as monthly options.
  • Weekly options offer Arbitrage opportunity between:
    • Weekly and monthly options
    • One week to maturity options and two weeks to maturity options.
  • Liquidity will improve on account of low cost, encouraging more participants to join.
  • Weekly options facilitate improvement in market depth and better price discovery.
  • Participants in the market can also take a short-term view of the underlying.
  • Participants in weekly options are offered short term insurance for their short-term portfolio, leading to improvement in market depth and better price discovery.

Definition of derivatives futures & options ‘Expiry Date’

Posted by smartadmin on

Definition: Just as the name implies, the date which a contract (normally a derivative contract) expires is called expiry date. All derivative contract based has a date of expiration, whether it is based on underlying security like a commodity, currency or stock; however, there is no expiry date for the underlying security.

A derivative contract which is dependent on underlying security can only exist for a particular period, and this contract comes to an end on the expiry date.

Description: The derivative contract between the buyer and seller is completely settled on the expiry date. The settlement occurs in any of the following ways.

  • a. Cash settlement:Instead of the underlying security, exchange of money is used to settle the difference between the spot price and the derivative price. At the moment, cash is used in settling equity derivatives in India.
  • b. Physical delivery: For physical delivery of the underlying security attached to a particular contract (which is the norm with commodities), the seller of the contract delivers the quantity to the buyer, who pays completely for it.