The NSE’s August series expiry for index and single-stock derivative contracts is scheduled for Tuesday, 25 August 2026. Under NSE rules, individual securities futures and options expire on the last Tuesday of the month. If that day is a holiday, expiry takes place on the preceding trading session.
Anuj Singhal, managing editor of CNBC Awaaz, has cautioned traders against taking positions in out-of-the-money, or OTM, stock options close to expiry. The concern is particularly relevant when an option is sold for only ₹3-4 because it appears unlikely to move into the money before the contract ends.
A stock can, however, make a sharp move on expiry day. An option that remains OTM in the morning may become in the money, or ITM, by the market close. For a single-stock contract, that change can create an obligation involving the entire lot rather than limiting the trader’s outcome to the small premium received.
Why stock options require attention
Index derivatives such as Nifty and Bank Nifty are settled in cash, so they do not require delivery of a company’s shares. Single-stock futures and options that remain ITM at expiry can instead move into physical settlement. Depending on the position, the trader may have to deliver shares or arrange funds to take delivery.
For example, if a share is priced at ₹1,000 and a trader sells a ₹1,050 call for ₹4, the position may appear safe if the share stays below the strike. If the share closes at ₹1,060 or higher on expiry, the call becomes ITM. A short call position could then require delivery of the full lot. With a lot size of 500 shares, the obligation concerns those shares, not merely the ₹4 premium.
When the required shares are unavailable in the demat account, short delivery may result. NSE Clearing provides for a buy-in auction in such cases, and any higher purchase cost and applicable charges may fall on the trader.
Call buyers also face delivery-related requirements. An ITM purchased call may require the buyer to take the full lot, making sufficient cash necessary. A broker may close the position before expiry if funds are unavailable, subject to its own rules and timing.
For puts, the responsibilities reverse: an ITM put buyer may have to deliver shares, while an ITM put seller may need to buy them. Stock futures can similarly require a long position holder to take shares and a short position holder to deliver them.
Traders who do not want physical settlement should review single-stock positions and follow their broker’s stated deadlines for closing them. Those retaining positions need to account for the contract’s full delivery requirement, along with applicable securities transaction tax and other charges. An OTM option generally expires worthless, but its status can change before expiry.
