Nifty Expiry Day Trading Rules | Options Risk Guide

Expiry day is not just another intraday session.
It is the most emotionally intense, volatile and misunderstood day in the Indian derivatives market.

Every Tuesday, Nifty weekly options expire. On this one day, option premiums race toward zero. Volatility compresses and expands in rapid cycles, institutional desks square off large hedged books, and algorithms actively defend settlement zones. The result is a market that appears full of opportunity but is structurally designed to punish hesitation, impatience and undisciplined execution.

Weekly & Monthly Expiry Schedule of Major Index Options

Index	Weekly Expiry Day	Monthly Expiry
Nifty 50	Tuesday	Last Tuesday of the month
Bank Nifty	Wednesday	Last Wednesday of the month
Nifty Financial Services (FINNIFTY)	Tuesday	Last Tuesday of the month
Nifty Midcap Select (MIDCPNIFTY)	Monday	Last Monday of the month

This guide documents the five principles that protect capital first and profits second.

1.Expiry Is a Race Against Time

On a regular trading day, time decay quietly works in the background. On expiry, time becomes the dominant force shaping every option’s price.Theta is the rate at which an option loses value as time passes and on expiry day. This decay accelerates sharply, eroding premiums even when price does not move much.Theta accelerates sharply after the opening hour, and as the clock moves closer to 3:30 pm, premiums collapse faster than price itself can move. This creates a cruel reality: you can be right on direction and still lose money simply because you were slow.

The closer an option gets to expiry, the less time it has to gain intrinsic value and therefore, the faster its time value collapses.

This collapse impacts different strikes differently:

At-The-Money (ATM) options suffer the fastest decay because their entire premium is made up of time value.
Out-of-The-Money (OTM) options lose value rapidly and often decay to zero because they have no intrinsic value left to protect them.
In-The-Money (ITM) options decay slower, as part of their premium is intrinsic value.

On expiry days by early afternoon, ATM options can lose over 30% of their value within minutes even when Nifty stays inside a narrow range — making expiry unforgiving for traders who rely on hesitation, discretion or manual execution.
Expiry traders on Sahi therefore operate inside a system that prioritises speed, automation and exit certainty.
Using one-tap chart execution, Auto SL/TP defaults and limit-based exits, traders eliminate the lag between decision and action.
Learn more about out features here.

Your SL and TP are not “ideas” , they are pre-programmed behaviours. When the market moves, your system responds instantly without waiting for your emotions to catch up.

Sahi Rule:
If your trade needs time, it is already wrong.

2.Expiry Is About Settlement Zones

Expiry trading is not a directional game. It is a settlement game.
Markets on expiry are guided by institutional positioning rather than retail opinions. Large option writers defend specific price bands because most of their positions are concentrated around certain strikes. As expiry approaches, they actively hedge and adjust these positions to prevent price from moving into zones where their losses would accelerate.

These hedging actions create invisible pressure zones on the chart areas where price repeatedly stalls, reverses or gets magnetised which traders observe as support, resistance and settlement zones.

These defended bands become Max Pain zones and price often gravitates towards them as expiry approaches.
Max Pain is the strike price at which option buyers lose the most money and option sellers lose the least money if the market expires there.
This level represents the point of maximum discomfort for buyers and maximum comfort for sellers.

Why does price often drift toward Max Pain near expiry?

As expiry approaches, large option sellers actively hedge and rebalance their positions to reduce their risk. These hedging actions create buying and selling pressure around certain strikes and collectively, this pressure often pulls price toward the Max Pain zone, where seller losses are minimised.

This does not mean price will always expire at Max Pain but it often acts as a gravitational centre around which price oscillates in the final hours of expiry.

In simple words:

Buyers suffer the most at Max Pain
Sellers suffer the least
And seller positioning often influences where the market tries to settle

Retail traders lose money because they think in “up” and “down.”
Sahi traders think in zones, traps and magnets.

Inside Sahi’s Live Option Chain, traders observe:

Heavy Call OI clusters (overhead resistance)
Heavy Put OI clusters (downside protection)
Max Pain levels (institutional comfort zone)
OI shifts and unwinding (where traps are forming)

Instead of guessing the market’s next move, traders align their trades around these structural zones. This converts expiry trading from a guessing game into a probability game.

Sahi Rule:
No zone clarity = No expiry trade.

3.Liquidity Is Your First Line of Protection

Expiry markets are full of optical illusions. Cheap-looking options often create the impression of easy money, but beneath that surface they hide some of the most dangerous liquidity gaps in the derivatives market.

Far Out-of-the-Money (Far OTM) strikes are option strikes that are placed significantly away from the current Nifty price. These options have very low premiums because they require a large price move to become profitable.

Because they look “cheap” and show large percentage gain potential, many traders are attracted to them which often creates artificially inflated Open Interest without real institutional participation.

Far OTM strikes typically suffer from thin volume, wide bid–ask spreads and unreliable market depth. Traders are able to enter these strikes easily because small retail orders get matched quickly at cheap prices.
But when volatility spikes, exits become difficult, delayed or expensive because there are very few serious buyers on the other side.

This turns small mistakes into disproportionately large losses.

Liquidity failure is one of the most invisible yet destructive reasons retail traders lose money on expiry.

At Sahi, traders are equipped with visibility-first tools that surface liquidity conditions before a trade is even considered.Through live index volume , easy to read option chain, real-time spread visibility , traders can objectively assess whether a strike is genuinely tradable or merely optically attractive.

Only strikes showing consistent volume participation typically ATM, one-step ITM and one-step OTM should be treated as high-quality candidates. This ensures that when price accelerates or reverses sharply, exits remain available, slippage stays controlled and execution remains stable even during emotional market phases.

Liquidity is no longer an afterthought.
On Sahi, it becomes the trader’s first line of defence.

Sahi Rule:
If you cannot exit safely, you must not enter.

4.After 2:30 PM, Switch from Profit Mode to Protection Mode

The final hour of expiry is not a profit window, it is a psychological minefield.
After 2:30 PM, gamma dominates option pricing.Gamma measures how fast an option’s delta changes when price moves and near expiry, even small price changes cause violent premium swings. At the same time, liquidity begins thinning, and stop hunts intensify. Traders who are down for the day often attempt revenge trades which compound losses rapidly.

During this phase, traders should treat the market as capital lockdown time, a period where protection must take priority over profit-seeking. Position sizes should be consciously reduced, fresh entries should be avoided, and the primary focus should shift from chasing opportunity to safeguarding existing capital.

At the same time, Auto SL/TP should be relied upon to ensure that exits are executed through predefined system logic rather than emotional reaction, allowing discipline to remain intact precisely when psychological pressure is at its highest. On days when expiry triggers extremely volatile and unpredictable moves, having SL and TP already in place also acts as a protective shield automatically limiting damage and locking profits even when price spikes faster than manual reaction can handle.

Sahi Rule:
After 2:30 PM, survival matters more than recovery.

5.Loss Is Defined First

Expiry destroys traders not through bad strategies, but through undefined risk. When loss limits are not pre-decided, emotions override discipline and small losses turn into capital damage.

Expiry trading should begin not with entries ;but with risk architecture.

Traders should predefine:
• Per-trade maximum loss
• Daily maximum loss
• Maximum number of trades
• Default SL/TP behaviour

These parameters are enforced in Sahi through Order Defaults, Auto SL/TP and one-tap execution, making discipline mechanical rather than emotional.

Sahi Rule:
Loss is decided before entry not after damage.

Expiry is not a lottery.It is a discipline exam.The safest expiry traders are not the smartest They are the most system-protected.

Frequently Asked Questions (FAQs)

What makes expiry day trading different from normal intraday trading?

Expiry day trading is driven by accelerated time decay, settlement positioning, and reduced liquidity. Option premiums lose value rapidly, and institutional hedging plays a larger role than directional sentiment.

How does theta decay affect options on expiry?

Theta decay increases sharply on expiry, especially for ATM and OTM options. Premiums can fall quickly even without significant price movement, making delayed exits costly.

What is the role of Max Pain on expiry day?

Max Pain represents the strike where option buyers lose the most and sellers lose the least. Seller hedging activity often causes price to gravitate toward this level near expiry.

Why is liquidity important on expiry?

Low-liquidity strikes can trap traders during volatility spikes. Adequate liquidity ensures exits remain possible with controlled slippage during rapid price movement.

Does gamma increase on expiry day?

Yes. Gamma peaks near expiry, particularly around ATM strikes. This increases premium volatility and makes late-session trading more unstable.

5 Rules Every Trader Must Follow on Nifty Options Expiry Day