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Expiry-Day Options Need a Different Risk Clock

Understand how time decay, option sensitivity, liquidity and position sizing can change as an Indian options contract approaches expiry.

By Trade Firm Research DeskPublished 12 August 2026Reviewed 26 August 2026

As an options contract approaches expiry, time remaining falls and premium can reprice rapidly. A strategy suitable earlier in the series may behave very differently on expiry day.

Time remaining becomes scarce

Near expiry, out-of-the-money premium can erode quickly while at-the-money sensitivity may change sharply around the underlying price. Small delays can therefore have a larger impact than expected.

Fast price does not remove execution risk

Rapid markets can widen spreads and increase slippage. A visible stop on a screen does not guarantee the same execution price.

  • Bid-ask spread
  • Order type
  • Market depth
  • Slippage allowance

Reduce assumptions before increasing size

Expiry-day decisions should begin with a strict maximum rupee loss, smaller assumption set and clear no-trade conditions. High potential percentage movement also means high loss sensitivity.

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