On NSE, futures are marked to market each trading day, with gains and losses settled in cash; at expiry, the final profit or loss is also cash settled. Options work differently: a buyer pays a premium for a right, while a writer accepts an obligation. What happens to an option at expiry—and whether settlement involves cash or delivery—depends on the contract, and NSE’s own pages do not agree on all details. Check the latest rules for the specific underlying before holding a position through expiry.
How futures and options differ
| Feature | Futures | Options |
|---|---|---|
| What each side takes on | Both sides hold a futures position that is marked to market daily and settled at expiry. | The buyer pays a premium for a right without an obligation; the writer receives the premium and takes on an obligation. NSE describes this distinction. |
| During the contract | Daily mark-to-market profit or loss is settled through clearing, normally on T+1 under NSE’s described procedure. NSE settlement mechanics. | Premium settlement is cash settled, with daily premium amounts settled T+1 under NSE’s settlement-mechanism page. NSE settlement mechanics. |
| At expiry | The final profit or loss is calculated using the final settlement price and settled in cash; the position then ceases to exist. | In-the-money contracts are automatically exercised, but settlement form depends on the applicable contract rules. NSE pages conflict on whether some options are cash or physically settled. |
| Typical listed cycle | Covered NSE equity-index and individual-security futures have three consecutive monthly contracts. | Cycles differ by underlying: Nifty 50 includes weekly and longer-dated series; several other index options have monthly expiries, and individual-security derivatives have up to three monthly expiries. NSE contract specifications. |
Do futures have daily settlement?
Yes. NSE compares the trade price—or the previous day’s settlement price for an open position—with the current day’s settlement price. The resulting daily profit or loss is paid or received through clearing, and the position’s reference price resets to that day’s settlement price. NSE describes pay-in and pay-out as T+1. This means an adverse price move can require cash during the life of a futures contract, rather than only at expiry. NSE’s settlement-mechanism page.
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What happens to a futures position at expiry?
NSE Clearing marks open futures positions to the final settlement price. The resulting profit or loss is settled in cash, with the expiry amount debited or credited on T+1 under NSE’s stated procedure. The futures position ceases to exist after expiry. NSE settlement mechanics.
Are futures physically settled in India?
For the NSE equity derivatives covered by the settlement-mechanism page, futures’ final profit or loss is settled in cash. That is distinct from whether an option on a particular underlying can lead to delivery: do not infer an option’s settlement method from the futures rule.
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Are options cash settled or physically settled?
The NSE pages reviewed do not give one consistent answer. NSE’s general settlement page describes option exercise as cash settled, while its individual-securities page describes stock options as physically settled and its Nifty 50 page also says physical settlement. The individual-securities page and Nifty 50 page therefore conflict with the general settlement description. General settlement mechanism; individual securities; Nifty 50 derivatives.
For a live position, check the current NSE Clearing and contract-specification circular for the exact underlying and expiry before assuming that settlement is cash-only or that delivery will not occur. NSE’s settlement-mechanism page is marked updated January 3, 2023; the consolidated F&O circular listing reviewed shows a circular dated April 28, 2026. The date difference is a reason to verify current rules, not proof that a particular rule changed. NSE circular listing.
What happens if you hold an option on expiry?
NSE says in-the-money option positions are automatically exercised at expiry. Long positions are assigned to short positions in the same series on a random basis. Therefore, doing nothing does not necessarily leave an open option position untouched: exercise, assignment, and the applicable settlement obligation may follow. Check the specific contract’s current exercise and settlement rules before expiry. NSE settlement mechanism.
Buyer and writer risk are different
- Option buyer: pays a premium for a right without an obligation, but an in-the-money position may be automatically exercised at expiry.
- Option writer: receives a premium but accepts an obligation; assignment and the contract’s settlement method can matter at expiry.
Calling options simply “limited risk” leaves out the writer’s obligation and possible settlement or delivery exposure. Margin, capital, tax, and delivery consequences depend on the contract and broker or clearing rules; the applicable values are not stated in the NSE pages cited here.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchWhen do futures and options expire in India?
NSE’s contract specifications list Tuesday expiry for the covered equity-index and individual-security contracts. If Tuesday is a trading holiday, expiry moves to the previous trading day. The exact date and available series depend on the underlying and contract; confirm the specific series on the exchange rather than assuming all NSE derivatives share the same calendar. NSE contract specifications.
Listed cycles vary by underlying
- Covered equity-index futures: three consecutive monthly contracts.
- Nifty 50 options: weekly, monthly, quarterly, and semi-annual expiries.
- Several other equity-index options: monthly expiries.
- Individual-security derivatives: a maximum three-month cycle; stock options have up to three monthly expiries.
These are product specifications, not a guarantee that every series is available at all times. NSE can change specifications through circulars, so confirm the live contract details. NSE contract specifications.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare risk before choosing a contract
- Cash-flow timing: futures produce daily mark-to-market cash flows, so losses can require funds before expiry. A purchased option involves paying the premium; an option writer takes on an obligation for the premium received.
- Expiry exposure: futures settle their final profit or loss in cash. Options may be automatically exercised when in the money, and the settlement form must be checked for the specific contract.
- Position direction matters: an option buyer’s rights differ from a writer’s obligations. “Options risk” is not a single exposure.
- Account-specific costs are separate: current margin, capital, tax, and delivery consequences depend on the contract and broker or clearing rules; no current figures for those items are established by the sources cited here.
The mechanics describe obligations and settlement, not which instrument is suitable for a particular person. Avoid choosing solely on the assumption that an option is automatically safer or that all positions can be closed without expiry consequences.
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