The Impact of Bank Nifty Weekly Expiry Shifting to Wednesdays

This is a copy of the email sent to my subscribers on Friday, Sep 8, 2023. If you want to receive such emails you can subscribe in the form above.

Topic: Bank Nifty Weekly Expiry has shifted to Wednesdays – what will be the impact?

Bank Nifty’s weekly expiry day started on Wednesdays. The first Wednesday weekly expiry was on the 6^th of September 2023 (Wednesday). You also know this. So why am I sending you this email?

Because there are certain things that you should know if you trade bank nifty weekly options.

Please note that weekly options will expire on Wednesdays but the monthly and quarterly contracts options will expire on Thursdays only.

If you do not know about the quarterly contracts – here is a short explanation:

Nifty Bank index options have three quarterly expiries – the last Thursdays of March, June, September & December.

Please note that monthly expiries and quarterly contracts are not different. They are the same option contacts – it is just that some traders want to trade farr-off options which are not very popular in India. So to make them popular NSE has branded them as quarterly contracts. Just to increase the liquidity in the capital markets.

For example, in September 2023 the Bank Nifty expiry days are:

1^st expiry – Wednesday – 6^th of September, 2023 (weekly expiry)

2^nd expiry – Wednesday – 13^thof September 2023 (weekly expiry)

3^rd expiry – Wednesday – 20^th of September, 2023 (weekly expiry)

4^th expiry – Thursday – 28^thof September, 2023 (monthly & quarterly expiry)

If Wednesday is a trading holiday, then the expiry day would be the previous trading session.

If Thursday is a trading holiday, then the expiry day would be the previous trading session.

What impact this will have?

Some traders hedge nifty options with bank nifty as the move is almost the same. This will end. They will now have to hedge bank nifty options with bank nifty options only. If you have done my course you will know that I discourage hedging options of one company/index with another.

For example, you cannot hedge HDFC Bank options with Axis Bank options – it will only get confusing.

So I think this is good. However, traders have a lot of ego. Those who hedge bank nifty options with nifty will still do it. They are willing to take a loss but will not change their strategy. It is unfortunate but this is what they will do. They might change after taking some big losses. But not sure why they let their ego come under way in trading. You at least do not let this happen.

Volatility in Nifty on the weekly expiry days (first three Thursdays of the month), will reduce as Banknifty has a lot of weight on Nifty. Both Nifty & Bank Nifty monthly options expire on Thursdays – so last week will be volatile.

Today is Thursday and see how Nifty is behaving:

The volume will increase on Wednesdays in Bank Nifty and Thursdays in Nifty. Expiry day intraday traders will trade bank nifty weekly options on Wednesdays and nifty options on Thursdays. On the last Thursday of the month, both Nifty and Bank Nifty will be volatile.

Moreover, there is news that the instant settlement of stocks is to come in by October 2024. I will write an email when all the details are clear.

Trade with strict stop losses and profit targets.

Wishing you the best always.