What happens if you hold a futures contract until expiration?

The futures expiration day is when a futures contract will cease to exist. Holding a contract past this expiration date will trigger obligations for you to purchase the underlying asset. Futures do not. Long or short the futures contract into expiry you will be exercised.

What happens if we don’t sell futures on expiry?

Hence if you don’t square-off futures, then it will not be rolled-over. It will be settled in cash. If you want to roll over, you have to square-off manually and then buy next month stock futures for that stock.

What happens when a commodity contract expires?

Upon expiration of the futures contract, the clearinghouse matches the holder of a long contract against the holder of a short position. The short position delivers the underlying asset to the long position. Thus, most traders want to avoid physical delivery and roll their positions prior to expiration to avoid it.

What happens when a futures option expires?

Depending on the expiration cycle, some futures options expire to cash, while others expire to the underlying futures contract. Futures options will expire into cash when the options and futures expire in the same month. If the options and the future expire in different months, the options settle to the future.

What happens if you default on a futures contract?

Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees.

Can I square off futures before expiry?

No. You may not square off the position till the contract expires. In that case, ICICIDirect as well as Exchange would expire your position on the last day on contract after running EOD MTM and your position would be closed at the closing price of the spot (equity) market as per the current regulations.

What happens if I don’t sell my options?

If the option expires unprofitable or out of the money, nothing happens, and the money paid for the option is lost. A put option increases in value, meaning the premium rises, as the price of the underlying stock decreases. Conversely, a put option’s premium declines or loses value when the stock price rises.

How futures affect options?

An option on a futures contract gives the holder the right, but not the obligation, to buy or sell a specific futures contract at a strike price on or before the option’s expiration date. These work similarly to stock options, but differ in that the underlying security is a futures contract.