11.18What is an option’s expiry date?
1What is it?
The last day the option can be exercised. Indian index options are European style: settled only at expiry, in cash.
2Why does it exist?
As expiry approaches, time value shrinks to zero. On expiry day the option is worth only its intrinsic value.
3Quick revision
- European style for index options.
- Time value → 0 at expiry.
4Knowledge check
Q1. Can you exercise Nifty options before expiry?Show answer
No (European style), but you can sell them anytime.
Q2. Value of an OTM option at expiry?Show answer
Zero.
Q3. What happens to time value near expiry?Show answer
It shrinks quickly.