Nifty weekly options are exchange traded options built upon nifty index with a short maturity period of one or more weeks.

The main difference between them is the period of maturity. Monthly options have maturity periods of one month, two months of three months. Another options series is generated after the one month options expire. For weekly options, the period of maturity ranges from one to five weeks. Another difference between the nomenclature of weekly and monthly options.

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.

Following SEBI guidelines, the expiry day will take place on the trading day before if the expiry day of the weekly options falls on a trading holiday.

The weekly options and monthly options have the same parameters viz. Underlying, Tick size, contract multiplier, price quotation, trading hours and strike price intervals.

• 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.

Measures for controlling risk adopted for weekly options are quite similar to those adopted for monthly options since introducing weekly options is more of adding new series and not a new product as such.

According to the futures and options (F&O) segment, the lot size of CNX nifty is 75.

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.