S&P CNX NIFTY INDEX FUTURESEducation
Pre-Expiry week's Volatiliy in Indian Market
Due to the physical settlement of stock derivatives(Futures and options) upon expiry, the margin required to trade/carry over such derivatives starts increasing gradually from Friday of the week preceding the expiry week. Forcing traders to close their positions in the pre-expiry week causes the pre-expiry week's volatility. In most cases, it results in a correction of the larger trend in the market. After SEBI has changed the margin rules for intra-day trading, many traders have moved to options thereby raising options share of net trading volume in monetary terms to almost 80%, thereby making the impact of pre expiry week very signifacant.
Like most things in market analysis, it isn't a rule but a general guideline that helps you better manage your risk better.
Like most things in market analysis, it isn't a rule but a general guideline that helps you better manage your risk better.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.