SEBI in Talks to End Weekly Options Expiry: What You Need to Know
On 5 August 2025, a major shift was hinted at in the Indian stock market landscape. According to CNBC-TV18 and Zee Business, the Securities and Exchange Board of India (SEBI) is reportedly in discussions with the Finance Ministry to ban weekly index-options expiries. Instead, the market could see a move towards fortnightly or monthly expiry cycles.
This news has created a buzz among traders, investors, and analysts alike. Let’s understand the full picture, reasons behind this potential decision, and its possible implications on the financial markets.
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What Is Weekly Options Expiry?
Weekly options expiry refers to derivative contracts—especially index options like Nifty and Bank Nifty—that expire every Thursday. These weekly contracts have gained massive popularity over the last few years due to:
High liquidity
Lower premiums
Frequent trading opportunities
Quick intraday profits
However, this same popularity has led to some unintended consequences in the markets.
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Why SEBI Is Considering to End Weekly Expiries
As per reports, SEBI has been observing increased market speculation and volatility due to weekly options. Here are the key reasons why SEBI is considering a move away from weekly expiries:
1. Retail Investor Risk
Weekly options are high-risk instruments, especially when used without proper risk management. Many new retail traders, drawn by low premiums, enter these trades without fully understanding the risks, leading to massive losses.
2. Market Manipulation
There have been concerns around price manipulation and sharp index movements on expiry days. Weekly contracts amplify this, giving rise to suspicious short-term movements that can hurt genuine investors.
3. Excessive Speculation
With weekly options available, many traders focus on short-term gambling rather than long-term investing or hedging. This goes against SEBI’s aim of encouraging healthy, transparent markets.
4. Systemic Risk
Increased intraday volumes and large open interest positions can cause systemic risks, especially in volatile times. Reducing expiry frequency could stabilize the system.
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What Changes Are Being Proposed?
SEBI is reportedly discussing replacing weekly index options with either:
Fortnightly expiries
Monthly expiries
This would give traders fewer expiry events, potentially reducing speculative behavior, and aligning Indian markets with global standards like those in the US and Europe, where monthly expiries are the norm.
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How Will This Impact Traders?
Let’s break it down from different trader perspectives:
📉 For Intraday and Option Sellers
This move will directly impact option sellers who thrive on time decay from weekly contracts. With fewer expiries, the pace of premium decay slows, reducing income potential.
📈 For Long-Term Investors
Long-term investors may benefit from reduced market noise, especially around expiry days. There would be less volatility, improving the environment for positional trades.
💼 For Institutions and HNIs
These market participants are likely to adapt quickly by shifting to monthly hedging strategies or using other instruments like futures or longer-duration options.
🤝 For New Retail Traders
This move may protect new traders from impulsive trades and losses due to lack of knowledge, encouraging them to learn options trading systematically.
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Market Reaction and Expert Opinions
While SEBI has not officially confirmed the move yet, many market experts see this as a long-overdue reform.
Positive Views: Many financial advisors welcome the idea, citing that it will improve market stability and investor safety.
Criticism: On the other hand, traders argue that this decision may kill liquidity, especially in Bank Nifty, which sees record participation on expiry days.
Social media and trading communities are buzzing with mixed reactions—while some welcome the “detox” from gambling-style trading, others feel SEBI is overreaching into trader freedom.
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What Should Traders Do Now?
If you’re an active trader, here are some steps to prepare for potential changes:
1. Start learning monthly options strategies like calendar spreads and iron condors.
2. Reduce your reliance on weekly expiry strategies.
3. Focus more on risk management and capital preservation.
4. Stay updated with SEBI circulars and official announcements.
Conclusion: A Bold Step for a Sustainable Market?
If implemented, this move will go down as one of the most impactful regulatory decisions in recent years. While it may disrupt the current trading ecosystem temporarily, the long-term goal appears to be building a more resilient and investor-friendly market.
The final decision is still under review, and SEBI is expected to hold discussions with various stakeholders before making it official.
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