Index options settle in cash on expiry day, at the index close until 7 Dec 2026

  1. Tuesday expiry for NIFTY

    NIFTY weekly and monthly contracts expire on Tuesday from this date. When the Tuesday is a trading holiday, expiry moves to the previous trading day.

  2. Example: the 16 Jun 2026 weekly

    Every strike out of the money at the close settled at zero. Every strike in the money settled at the gap to the close.

  3. Closing auction in the cash market

    SEBI's closing auction session starts in the cash market. The index close, which sets the final value of an expiring index contract, now takes in the auction.

  4. Settlement method changes

    The final value becomes the index worked out from the volume weighted average prices of its stocks over the last thirty minutes of continuous trading. Expiring index contracts stop trading at 3:30 pm.

Dated rules and the 16 Jun 2026 example. The final value is the settlement value of the index, not a trade price. Source: NSE contract specifications; SEBI circulars of 26 May 2025, 16 Jan 2026 and 15 Oct 2026. As of 16 Oct 2026.

Take the NIFTY weekly that expired on 16 Jun 2026, a Tuesday. An index option settles in cash, so no shares change hands. The exchange sets a final settlement value for the index, and each open contract is closed against it. That is the last day of the contract.

For a call, the intrinsic value is how far the index is above the strike. For a put, it is how far the index is below the strike. An option with no intrinsic value at expiry has nothing left, because its time value has run out. A buyer of that option loses the premium paid. A seller keeps the premium.

The 16 Jun 2026 file is dated, so anyone can check the rule against it. In NSE's end of day file for that day, every strike out of the money has a settle price of zero, and every strike in the money has a settle price equal to its gap to the index close. The question on options that expire in or out of the money shows the table.

Costs and charges still apply. The buyer of an exercised option pays STT on its intrinsic value, and a seller faces extra margin on short index options that expire that day. Stock options work differently, because they are settled physically, with delivery of shares.

The way the closing value is built changed on 3 Aug 2026 and changes again on 7 Dec 2026, as the timeline shows. This page explains the rules and does not decide what any position should do.

Before you trade. Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. Read the SEBI study