Expiry day is the last trading day of an options contract, after which it becomes worthless if not exercised. On this day, all open option positions are either settled or expire.
Why volatility spikes on expiry:
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Rapid time decay (Theta) erodes option value quickly
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Traders square off or roll over positions simultaneously
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Heavy hedging and unwinding by institutions
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Sharp moves near key strike prices (max pain effect)
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Low liquidity in far strikes causes sudden price jumps
Key pointers for traders:
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Avoid overtrading on expiry
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Use defined-risk strategies
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Expect fast moves, not trends
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Manage position size strictly
Bottom line:
Expiry day is driven more by position adjustments than fundamentals, making prices fast, unpredictable, and risky—especially for beginners.