India’s derivatives market may face another major change as the Securities and Exchange Board of India, or SEBI, reviews the future of weekly options expiry.
The regulator has already reduced the number of weekly contracts, raised the minimum contract size and introduced other safeguards. Now, it is looking at a bigger question: should weekly expiry contracts continue at all?
SEBI Chairman Tuhin Kanta Pandey said in September 2025 that the regulator would consider a proposal to end weekly expiry in equity derivatives. At that time, SEBI said it would bring a consultation paper once the details were ready.
The issue has gained fresh attention after a sharp episode on the BSE Sensex weekly expiry on August 13, 2026. The event raised new questions about the risks that can arise when large derivatives positions depend on a final market price.
Why Weekly Options Matter
Weekly options are contracts that expire within a week. They allow traders to take a short-term view on an index such as the Nifty 50 or Sensex.
These contracts became popular in India because they need less money than many longer-term positions and can offer large gains when the market moves in the expected direction. The same feature can also lead to large losses when the market moves the other way.
For many retail traders, weekly options became a regular part of market activity. A trader could buy an option in the morning and see most of its value disappear by the afternoon if the market did not move as expected.
The short life of these contracts also creates a strong focus on expiry day. As the final hours approach, option values can change very fast. This can create large price moves and high risk, especially when many traders hold similar positions.
SEBI Has Already Cut Weekly Expiries
The possible end of weekly expiry is not SEBI’s first step.
In October 2024, SEBI ordered exchanges to offer weekly derivatives for only one benchmark index each. The new rule took effect from November 20, 2024.
After that change, the NSE kept weekly options on the Nifty 50. It stopped weekly options on Bank Nifty, Nifty Financial Services and Nifty Midcap Select.
The BSE kept weekly options on the Sensex. It stopped weekly contracts on Bankex and Sensex 50.
SEBI later made another change to expiry days. From September 1, 2025, NSE expiry shifted to Tuesday and BSE expiry shifted to Thursday for new contracts. Monthly contracts also moved to the last Tuesday on NSE and the last Thursday on BSE.
SEBI’s 2025 consultation paper said the aim was to reduce concentration risk, improve market stability and give traders better risk management conditions. It still allowed one weekly benchmark index option on each exchange.
Why SEBI Is Concerned
The main issue is not simply the existence of options. The bigger concern is the scale of short-term speculation around expiry.
SEBI has spent the past few years studying the rise of retail participation in futures and options. Its earlier study showed that individual traders had a net loss of ₹1.81 trillion, or about $21.57 billion, in equity derivatives over the three years to March 2024.
Only 7.2% of individual traders made a profit during that period.
The regulator has also raised concerns about very high activity on expiry days.
Weekly options can make this problem stronger because the time left before settlement becomes very small. A small move in the index can then cause a major change in an option’s value.
This can turn a normal market session into a very high-risk event for traders who use large positions.
The August 13 Sensex Episode
The latest concern comes from the Sensex weekly expiry on August 13, 2026.
That day was also one of the first important tests of the new Closing Auction Session, or CAS. The system became effective on August 3, 2026.
Under CAS, normal trading in covered stocks ends at 3:15 pm. A reference price is then set, followed by an auction from 3:20 pm to 3:30 pm. The final equilibrium price is set by 3:35 pm.
The problem came when the Sensex showed several sharp price spikes during the auction.
SEBI’s order recorded three major spikes. The first took the Sensex from 77,661.40 to 78,023.42 in just two seconds, a rise of 362.02 points.
The second move took the index from 77,707.84 to 77,840.51 in 12 seconds, a rise of 132.67 points.
The third move took the Sensex from 77,787.94 to 78,193.02 in 28 seconds, a rise of 405.08 points.
SEBI later barred two entities and impounded ₹3.67 crore in alleged wrongful gains. The regulator said the case involved trades during the CAS on the Sensex weekly expiry day.
The case does not by itself prove that weekly expiry caused these price moves. However, it shows why expiry-day price formation can attract close regulatory attention.
What Happens If Weekly Expiry Ends?
If SEBI removes weekly options, the biggest effect would be on very short-term traders.
Traders would have fewer contracts that expire within days. They would instead have to use options with longer maturities.
That would change the way many traders manage their positions. A strategy based on rapid time decay would become harder to use. Traders who depend on daily or weekly expiry trades would also have fewer opportunities.
For option buyers, the change could reduce some of the temptation to take very short-term bets. An option that expires in a few days can lose value very fast. A longer-dated option usually gives the buyer more time for the market view to work.
For option sellers, the impact could be even more important. Weekly options are popular with sellers because time decay can work quickly in their favour. If weekly contracts disappear, they may have to shift towards monthly or longer-term options.
Impact on Exchanges and Brokers
A ban or major cut in weekly options could also affect stock exchanges and brokerage firms.
Weekly options have become a major source of trading activity in India. Brokers earn from trades, while exchanges benefit from high market activity.
A sharp fall in weekly options activity could therefore reduce trading volumes and revenue across parts of the financial market.
Zerodha had estimated in 2024 that equity options volumes could fall by about 30% after SEBI’s earlier rules took effect.
However, not all trading would simply disappear. Some traders could move to monthly options, cash equities, commodities or other products.
Retail Traders May Feel the Biggest Impact
Retail traders are likely to face the most visible change.
For a small trader, weekly options can look attractive because the entry cost may seem low compared with the size of the market position. But the low premium does not mean low risk.
An option can lose most or all of its value before expiry. When traders use large positions, the loss can become serious.
SEBI’s recent work suggests that the regulator wants the derivatives market to become less dependent on short-term retail speculation and more focused on sensible risk management.
The goal is not to remove derivatives from India. Futures and options have an important role in hedging, price discovery and portfolio protection. The concern is whether the current level of short-term activity creates risks that are too high for ordinary investors.
A Major Shift for India’s Options Market
Ending weekly expiry would be a much bigger step than SEBI’s 2024 reform.
The regulator first reduced the number of weekly contracts. It then changed expiry days and added more risk controls. The next step could move the market towards longer-maturity contracts.
SEBI’s draft framework from May 2026 still stated that weekly contracts would be available on one benchmark index for each exchange. It also kept Nifty and Sensex as the relevant benchmark indices.
Therefore, a complete end to weekly expiry would represent a further change from the existing framework.
For now, traders should treat the idea as a regulatory possibility rather than a confirmed ban.
What It Means for the Market
SEBI’s approach shows a clear direction: less focus on extreme expiry-day activity and more focus on market stability.
Weekly options gave Indian traders a fast and flexible product, but they also helped create a market where huge volumes could gather around a single expiry session.
The regulator now has to balance two needs. It must protect retail investors and reduce risks, while also keeping India’s derivatives market liquid and useful for professional investors.
If weekly expiry does end, the Indian options market will not disappear. Instead, the centre of activity could move towards monthly and longer-duration contracts.
For retail traders, the message is simple. The era of easy access to very short-term options may be coming to an end. For brokers and exchanges, it could mean lower volumes. For SEBI, it would mark another major step in its effort to make India’s derivatives market safer and less driven by extreme expiry-day speculation.
ALSO READ: Digicontent FY26 Revenue Rises 10%, Profitability Takes Hit
