F&O expiry: Monthly expiry shifts to Monday; how it may impact stock traders

The National Stock Exchange (NSE) on Tuesday said all Nifty index weekly futures and options (F&O) contracts would expire on Monday instead of Thursday. The latest decision from the leading exchange will come into effect from April 4, 2025. The monthly contracts of all stocks will also expire on the last Monday of the expiry month.

NSE also shifted F&O expiry for Bank Nifty, FinNifty, Nifty Midcap Select and Nifty Next50 to the last Monday of the expiry month effective from April 4. "The circular shall come into effect from April 04, 2025 expiry day for all existing contracts will be revised to 'new expiry day' on April 03, 2025 (EOD)," said NSE

Shifting NSE’s weekly expiry to Monday is a smart competitive move, and it is likely to have some clear strategic and market-level impacts including increased volumes, competitive positioning of NSE and shift in market dynamics, said Narinder Wadhwa, MD & CEO at Ski Capital Services.

Having a Monday expiry makes NSE the natural first stop for rolling over or squaring off positions. This could lead to a notable uptick in volumes, particularly for Nifty and Bank Nifty contracts, he added with an emphasis on NSE's intention to stay ahead of BSE in terms of capturing liquidity. "Traders to rebalance portfolios or hedge risk early in the week will likely prefer NSE products," Wadhwa said.

Derivatives trading enables participants to speculate the prices of underlying assets without actually owning them in their portfolios. Only 1 per cent of the individual traders managed to earn profits exceeding Rs 1 lakh, adjusting for transaction costs.

According to a Sebi analysis in September 2024, individual traders in the F&O market suffered a staggering Rs 1.8 lakh crore in aggregate losses over the past three financial years, with nearly 93 per cent of the investors, or nine out of 10 traders, incurring average losses of Rs 2 lakh each.  The top 3.5 per cent, or about 4 lakh traders, suffered an average loss of Rs 28 lakh each over the three years from FY22 to FY24.

Foreign Portfolio Investors (FPIs) and proprietary desks will need to realign their hedging and rollover strategies, said Sundar Kewat, Technical and Derivatives Analyst at Ashika Institutional Equity. "With a Monday expiry, many institutions may opt to close positions by Friday rather than carrying risk over the weekend. Institutional players may seek to hedge their portfolios on Fridays to mitigate unexpected Monday movements," he said.

"While the full impact of this change will unfold post-implementation, short-term adjustments and increased trading volumes on Fridays are anticipated. Some traders may welcome the move as a way to reduce mid-week market congestion, while others may need to revise their strategies to accommodate Monday expiries," Kewat added.