Markets in red on Expiry dates

sridhga

Well-Known Member
#1
Why is there heavy selling in the markets on expiry dates? In otherwords why do markets go into red on derivative expiry dates?

:confused::confused:
 

sridhga

Well-Known Member
#3
Instead of making some vague statement, it would be prudent if you substantiate your statement with some relevant statistics... :)
That was not a vague statement. We experience heavy volatality on expiry dates. Volatility is almost synonymous with markets slipping. I just asked a question hoping someone would provide insights. I need not substantiate anything since, I am not trying to prove anything. If you know the answer please reply. That's all.
 

rh6996

Well-Known Member
#4
That was not a vague statement. We experience heavy volatality on expiry dates. Volatility is almost synonymous with markets slipping. I just asked a question hoping someone would provide insights. I need not substantiate anything since, I am not trying to prove anything. If you know the answer please reply. That's all.
One reason is that the FnO Position rollovers!! its not that markets are in the Red on expiry, but true, huge volatile moves are seen!!! All positions in the current month of expiry.. all futures, all options ae set to expire... people either exit or rollover the trades hence large number of trades creating large moves also!! Just my view as per my level of IQ!!! :p
 

sridhga

Well-Known Member
#5
One reason is that the FnO Position rollovers!! its not that markets are in the Red on expiry, but true, huge volatile moves are seen!!! All positions in the current month of expiry.. all futures, all options ae set to expire... people either exit or rollover the trades hence large number of trades creating large moves also!! Just my view as per my level of IQ!!! :p
I agree. But logically this should also result in the market drastically moving up sometimes. But generally on those volatile days we see red most often. Is there some reason. Moreover, if the month had major falls that almost results in a market fall on the expiry date.
 

sridhga

Well-Known Member
#7
Okay,

I guess the markets will go down on 30th or 31st of May. I do not know the correct reason, though. Either the markets will go down steeply on 31st or they have a smoother slide on both days. I believe that Today's nifty will be higher than the nifty close on 31st May. Today Nifty closed at 4990.1. Let's see.
 

sridhga

Well-Known Member
#9
Nifty Closed at 4924.25. This was as expected less than 4990 on day before yesterday. I did make profit in my trading based on these assumptions, though conceptually I do not exactly know the reasons behind them.
 

LivetoTrade

Well-Known Member
#10
@sridhga,

If you read some earlier posts of SG, he would have explained - closer to the series expiry you sell the current series at a higher price, and wait to buy the next month series at a lower price.

Rolling over one's position.
 

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