The expiry calendar
Monthly contracts expire on the last Thursday of the month; weekly contracts expire every Thursday. Near expiry, positions must be closed or rolled, which forces decisions on a clock. That clock is the structural difference from shares, which have no expiry.
Who should treat F&O as out of scope
SEBI’s own consultation papers have repeatedly flagged that the vast majority of individual F&O traders lose money. F&O exists for hedging and for professionals; the leverage built into contracts turns small price moves into large percentage swings. Nothing on this site recommends F&O to first-time investors, and the guides deliberately stop at explaining what the terms mean.
Lot sizes and margins
Every F&O contract trades in lots set by the exchange, not in single shares. A stock futures lot might be 500 shares, a Nifty options lot 75 units (per the current exchange schedule), and the contract value is lot size times price. You post margin, a fraction of the contract value, rather than paying in full. The margin amount is set by the exchange’s risk framework, rises when volatility rises, and is collected upfront under the peak margin rules. The combination of lots and margin is why F&O exposure runs several times larger than the money put up.
Expiry mechanics
Monthly contracts expire on the last Thursday of the month, and weekly contracts every Thursday. On expiry, index contracts settle in cash at the exchange settlement price. Stock derivatives settle as the exchange specifies, in cash or by delivery of shares for in-the-money stock options. A position held to expiry does not roll over on its own: you either close it, let it settle, or roll it by closing and reopening the next expiry. The expiry clock is the structural difference between F&O and shares, which have no expiry.
A concrete example
A Nifty futures contract expires on the last Thursday of the month. You enter it with margin, not the full value, and your profit or loss each day reflects the index move times the lot size. At expiry the contract settles in cash: no shares, no demat, just the net amount.
Questions people ask about Futures and options (F&O)
Index contracts settle in cash at the settlement price. Stock futures and in-the-money options settle as per exchange rules, often into shares. Out-of-the-money options expire worthless. Nothing in F&O carries over automatically, you must roll or close before expiry.
Because the published exchange data shows most individual F&O traders lose money, and the leverage in contracts turns small moves into large losses. Explaining what the terms mean is educational; teaching how to trade them would be advisory, and this site does not do that.
A futures contract has a price derived from the underlying plus carrying cost, and both sides pay margin. An option buyer pays a premium to the seller for the right to buy or sell, and the buyer’s maximum loss is the premium; the seller’s loss is open-ended. The premium is the price of the choice, and it decays toward expiry.
No. F&O positions sit in the trading account ledger and settle in cash or through settlement instructions. They never credit to the demat unless a stock option is exercised into delivery, in which case the shares arrive in the demat account like any delivery credit.
Ready to put the words to work?
The account costs ₹0 to open, and the first year of AMC is free.