Can an option buyer exercise their right any time during the contract's duration?
No, in the Indian derivatives market, option contracts follow the European style of exercise, meaning they can only be exercised on the expiry date, not before. This rule applies to both index and stock options traded on NSE.
What Does This Mean for Option Buyers?
Even if the market moves significantly in your favor before expiry, you must wait until the contract's last trading day to benefit from the intrinsic value—either by selling the option in the market or letting it be auto-exercised (if ITM).
Example:
Ms. Mehta buys a put option for Bajaj Auto:
- Strike Price: ₹3,000
- Expiry: 3 months
If Bajaj Auto drops to ₹2,900 in the first month, she cannot exercise the option early.
She must wait until expiry to realize any payoff.
What if...
| Scenario | Outcome |
|---|
| Option goes in-the-money mid-contract | You must wait until expiry to exercise |
| You want to exit early | You can sell the option in the secondary market |
| Option is out-of-the-money at expiry | It expires worthless; no exercise happens |
Tip: You can always close your position by selling the option before expiry if the premium has gained value.
Last updated: 27 Jun 2025
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