Futures Expiration Trading: Tips to Avoid "Losing" When the Market Is "Crazy"

Every month, the Vietnamese stock market has a special day that makes investors “dream of flying” – that is the derivative expiration day. This is not an ordinary day, because liquidity will surge, prices will jump wildly, and opportunities to make money as well as the risk of losing everything are both present. So, what exactly is a derivative expiration, and what should you do when it arrives?

What Is Derivative Expiration? Things You Need to Know Immediately

Derivative expiration is not as complicated as you might think. Simply put, it is the day when derivative products such as futures contracts (Futures) or options (Options) reach their expiration date. When these expire, anyone holding them must close the contract and settle – there are no other options.

In Vietnam, derivative expiration days usually fall on the third Thursday of each month. This is when the VN30 index futures (a basket of the 30 largest stocks on the exchange) will be automatically closed, and the settlement price is determined based on the closing price of the index on that day.

If you do not proactively close your contract before the market closes, the system will automatically liquidate it at the ATC (After-hours Trade Close) price – and this might not be very favorable for you.

Market Impact on Derivative Expiration Day – When Will the Market Go “Insane”?

The tricky part about derivative expiration is that it creates abnormal volatility. When large investors want the VN30 price to be at a certain level to gain an advantage, they will start “pulling” the price by:

• Buying or selling large volumes of stocks from major players like FPT, VCB, HPG…
• Creating sudden price swings, causing the index to jump up or fall sharply in an instant
• Distorting the true value of stocks, because transactions at this time are not based on actual supply and demand, but on the intentions of “big communities”

What is the result? Ordinary traders often get “drenched” if they are not careful. The gap between the highest and lowest prices within the day can be much larger than on normal days.

Three Types of Derivative Contracts – How to Handle Them When Expiring

###Options(

Holding options gives you the right, not the obligation. On the expiration day, you can decide whether to exercise the right or not. If you choose “no,” that right will automatically expire without any effect.

)Commodity Futures###

Theoretically, you are supposed to take delivery of the actual commodity. In practice? Most exchanges accept cash settlement instead of physical delivery. Only a few contracts require physical delivery – all clearly stated in the terms.

(Stock Index Futures) – The Most Popular in Vietnam

This accounts for 100% of the derivative market in Vietnam. These contracts will automatically close on the expiration day, and cash settlement is made the next business day. There is no physical commodity to deliver – just numbers on the screen.

Trading Strategies: How to Avoid “Losing Out” During Derivative Expiration

Strategy 1: Active Settlement – Avoid “Auto”

This is the most important: Close your positions before the market closes, rather than letting the system automatically liquidate them.

For example: You hold 10 VN30 contracts with an expiration date of 19/10. If you proactively request to close at 1,240.1, your profit/loss will be calculated at that level. But if you leave it to automatic, the system will liquidate at the VN30 ATC price of 1,239.5 – a discrepancy of 0.6 points, which may seem small, but when multiplied by the coefficient of 100,000 VND, it’s a loss of 60,000 VND.

( Strategy 2: Leverage Volatility to “Ride the Wave”

Expiration day is an opportunity for those who understand how to “read the wave.” If you see a good stock being sold off irrationally just to adjust the index, that could be a sign to buy more at this “unusual” price. Prices usually return to equilibrium after a few sessions, and you can profit from that.

) Strategy 3: Sit Back and Watch – “Doing Nothing” Is Also a Strategy

If you are not a high-frequency trader – someone who trades continuously with each wave – then consider simply sitting still. The market can fall sharply on expiration day, but that is only temporary volatility. The index will stabilize again after 1-2 sessions. Avoid panic selling at this time – that is how big investors make money from small investors.

Details You Need to Know About Derivative Expiration in Vietnam

In Vietnam, derivative tools mainly focus on VN30 index futures contracts and government bond futures. VN30 accounts for the majority of trading.

Important information to remember:

• Contract name: VN30FYYMM ###e.g., VN30F0125 is the contract for January 2025###
• Expiration date: The third Thursday of the contract month
• Price step: 0.1 index points
• Multiplier: 100,000 VND
• Maximum daily fluctuation: +/- 7%
• Maximum position: 5,000 contracts for individuals, 10,000 for organizations
• Trading hours: 8:45-9:00 ###ATO(, 9:00-11:30 )morning(, 13:00-14:30 )afternoon(, 14:30-14:45 )ATC(
• Settlement price:
  • If closed early: the price at your requested order execution
  • If left to automatic: the closing price of VN30 at the end of the session

The Power of Regulators – Markets Will Be More Stable

Since June 2022, the State Securities Commission has changed the calculation method for settlement prices. Instead of using the last-minute closing price )which is often manipulated(, the system now takes the average of the last 30 minutes, after removing the top 3 highest and lowest prices.

This makes “pulling” or “pushing” the index more difficult. If high volatility continues, regulators will implement additional measures.

In the long run, as the number of investors increases )currently only about 5-6% of Vietnamese have stock accounts(, liquidity will grow, and it will be harder for a small group to “manipulate” the market.

Golden Tips for Trading on Derivative Expiration Day

1. Know the Expiration Schedule Mark the expiration date of your held contracts on your calendar. You can find this information on your trading app or major financial websites. Even if you do not trade derivatives, knowing this date is important because it greatly impacts the underlying market.

2. Choose the Right Expiring Contract If you are a beginner, prioritize contracts expiring within the month because they are short-term and easier to predict than 2-month or quarterly contracts.

3. Manage Risks Strictly High volatility is both an opportunity and a danger. Always set clear stop-loss levels to avoid large losses if the market moves against your expectations.

4. Sit Out if Unsure No one forces you to trade on this day. If you feel unsafe, simply observe and wait for the next session when the waves have calmed down.

Conclusion: Derivative Expiration Is Not a Monster

In summary, derivative expiration is a special trading day with high liquidity and large volatility. It can be an opportunity to make money for those who understand the mechanism, but it can also be a trap for those acting recklessly.

The secret?

• Actively close your contracts instead of letting them auto-close
• Don’t panic when prices fluctuate wildly
• Manage risks like a pro
• Continuously learn from each expiration day

And remember: the volatility on that day is only temporary. The true value of stocks will return. That is when genuine investors show their true colors.