Futures Expiry: Why Investors Should Pay Attention to the "Hell Thursday"

Every month, the Vietnamese stock market falls into a “special” day—the derivatives expiration day. This is when the index can jump wildly, large investors “pull” or “push” stock prices down, and everyone discusses unusual market phenomena. But what exactly is happening during this trading session? And how to avoid getting “swept along”?

To Understand Clearly: What Is Derivatives Expiration?

Derivatives expiration is not a product but an event. It occurs when a derivatives contract(such as futures or options)reaches its expiry date. At this point, all positions must be closed or liquidated—there is no other option.

In formal terms, derivatives expiration day is the last day specified in the contract, when parties must fulfill their commitments: deliver the underlying asset(if any) or settle in cash. In Vietnam, cash settlement will occur on the next business day.

This is the time when large investors will exert maximum effort to regulate the market according to their wishes. Why? Because they need the closing price to be at a certain level for their contracts to be profitable. And when these market makers “release” or “buy aggressively,” the market is immediately “disrupted.”

Types of Derivatives Contracts and How They Expire

Not all derivatives operate the same way. Depending on the contract type, the expiration mechanism varies:

Options Contracts (Options)
Option holders must decide whether to exercise their rights on expiration day. If they do not act, the option will automatically expire and lose all value.

Commodity Futures Contracts (Commodity Futures)
In theory, buyers will receive the physical commodity. However, in practice, most contracts are settled in cash. Specific terms will be detailed in the contract.

Equity Futures Contracts (Equity Futures)
This is the most common type in Vietnam. These contracts never involve physical delivery—they are settled in cash. On expiration day, the contract automatically closes at the ending price.

Why Do Derivatives Expiration Days Cause Major Volatility?

Expiration days are not ordinary trading days. They have unique characteristics:

Liquidity Surges
On this day, the amount of money flowing into the market spikes. Investors close positions, open new ones, restructure portfolios—all at once. This creates a “liquidity storm.”

Stock Prices “Affected”
Large investors are strongly motivated to push the index in their favor. They will buy/sell large-cap stocks in the VN30 basket to influence the index. The result? Some stocks are “pumped” up or “pushed down” sharply—completely unreflective of their true value.

Discrepancy Between Market Price and Intrinsic Value
During expiration, buying and selling are not based on actual supply and demand or intrinsic value but on index regulation tactics. Retail investors can get caught up in these artificial fluctuations and suffer losses.

Short-term Profit Opportunities
On the other hand, experienced traders can profit from these unusual price swings. Opening new contracts, quickly closing positions—that’s their game.

In Vietnam: Derivatives Only Have VN30

Unlike developed countries, the Vietnamese derivatives market is quite “independent”—it mainly offers one official product: VN30 index futures (there is also government bond futures but less used).

The VN30 futures are priced based on the movement of the VN30 index—a basket of the 30 largest-cap stocks. Key details:

• Name: VN30FYYMM (e.g., VN30F0110 for January 2025)
• Expiration: 1 month, 2 months, quarterly, or bi-annual
• Expiration Date: The 5th (Friday) of the third week of the contract month
• Multiplier: 100,000 VND per index point
• Daily Price Limit: ±7% per session
• Trading Hours:
  • ATO (Auctions): 8:45 - 9:00
  • Morning Match: 9:00 - 11:30
  • Afternoon Match: 13:00 - 14:30
  • ATC (Auctions): 14:30 - 14:45

Important! Price Settlement Mechanism:
Since June 2022, authorities changed the closing price calculation method. Instead of using the last-minute price(which can be manipulated), the system now takes the average of the last 30 minutes(15 minutes of matching + 15 minutes of ATC), excluding the 3 highest and 3 lowest prices. This mechanism aims to limit “last-minute anomalies.”

Three Action Strategies on Expiration Day

1. Proactively Close Positions Before It’s Too Late

If you hold derivatives contracts, the best decision is to settle before the session ends—anytime during the expiration day. Why? Because you’ll get the closing price you choose, not one “manipulated” by others.

Real example: You hold 10 VN30F0110 contracts. The current price is 1,240.1. If you settle now, your profit/loss is based on this level. But if you don’t, the contract will be automatically liquidated at the ATC price of VN30(say, 1,239.5). The difference of 0.6 points × 100,000 = 60,000 VND—not huge, but if you hold many contracts, it adds up.

2. Adjust Your Positions - Seize the Opportunity to Buy Cheap

On expiration day, many stocks with solid fundamentals are sold off just to influence the index. This can be a good chance to buy good stocks at irrationally deep discounts.

Prices will return to normal in the following sessions. If you understand the company and believe in its potential, this is the time to “buy the dip.”

3. Do Nothing - A Valid Choice Too

Not all investors like short-term “trading.” If you lack confidence in exploiting temporary fluctuations, just stand aside and observe. Even if your stocks decline, it’s only temporary volatility—the prices will return to equilibrium. Avoid panic selling at this moment—that’s a smart decision.

Future Outlook: Volatility Will Gradually Decrease

Currently, the Vietnamese derivatives market still experiences abnormal phenomena on expiration days, especially during the ATC session. But there are reasons to be optimistic:

Regulatory Measures
The average price mechanism has been implemented. If volatility remains high, stricter interventions may follow.

Liquidity Will Increase
Vietnam’s derivatives market was established only in 2017 and remains quite young. Only about 5-6% of investors have stock accounts. As liquidity grows, “pushing” the index will become more difficult.

New Products May Launch
Options, commodity contracts… these products will diversify and balance market forces.

Important Warnings

Always Know the Expiration Date
Identify the exact expiration date of your contract. It will be liquidated whether you want it or not. This info is easy to find on trading apps or financial info websites.

Choose the Right Contract Duration
Contracts expiring within the month (short-term) are popular for their short-term predictability. Contracts lasting 2 months or quarterly have more variables.

Strict Risk Management
Large volatility = profit opportunity, but also high risk of loss. Use stop-loss orders, avoid overtrading—these are golden rules.

In Summary

Derivatives expiration day is an “extraordinary” day for the Vietnamese market. It can generate intense volatility, profit opportunities, but also significant risks.

If you hold contracts, proactively settle rather than let the system automatically process. If you don’t trade derivatives, pay attention to the underlying market—strange fluctuations on this day do not reflect true value and will quickly normalize.

Most importantly, remember that abnormal price swings are temporary and serve the manipulative aims of market makers. The intrinsic value of stocks remains unchanged—it’s just a short-term “game” on the market. Once you understand this, you’ll know when to participate, when to wait, and when to stay silent and observe.