Option Expiry Flows

Currency options expire at a stated cut — a fixed point in the day named in the contract, not at whatever moment the calendar day happens to end — and the positions attached to them stop being live at that point. In the hours before it, the hedges held against those options are unwound or adjusted, and the buying and selling that results is what traders mean by expiry flows. The observable effect, where there is one, is usually described as spot being drawn toward or held near a level at which a large amount is expiring, and then moving more freely once the cut has passed. Two cautions belong with that description. The over-the-counter option market does not publish its positions, so the expiry lists circulated in commentary are estimates gathered from market contacts rather than a record, and their completeness cannot be checked. And an expiry is one influence among many: a scheduled release, a policy statement or simply thin session liquidity can override it entirely. It explains behaviour that has already happened far more reliably than it anticipates behaviour that has not.