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You asked: how does an index option settle

Expiry, and how an index option settles

Expiry is the date the contract ends, and an Indian index option ends in cash: the exchange pays the difference between the strike and the settlement level, and everything else about the contract stops existing.

Mayawhat these words mean

Maya reads the desk’s written explainers and the glossary. She holds no market data at all, so she can say what a thing is and cannot say what it is doing today.