SQ ("Special Quotation") is the settlement price for expiring Nikkei 225 options and futures. It is simple to define and easy to misunderstand, and the open interest behaviour around it runs opposite to most people's intuition.
This trips people up constantly. The Nikkei 225 index opens using whatever prices exist at 09:00, including the previous close for any constituent that has not yet opened. The SQ value instead waits for each stock's actual opening auction.
On a volatile morning, slow-opening large caps can push the two apart by several hundred yen. Contracts settle at the SQ value — not at the index print you saw on screen.
The intuition is that positions get unwound as expiry approaches and open interest drains away. The data says otherwise.
The August 2026 series went from 137,311 contracts on 17 July to 169,955 on 7 August — up 24% in three weeks, one week before expiry. Short-dated options are cheap and responsive, so short-term flow concentrates into them rather than leaving.
Then it disappears at once. On 14 August 2026, SQ day, total open interest fell by 156,105 contracts in a single session (calls −53,942, puts −102,163). Nothing decayed; it accumulated and was extinguished.
This is why the supply-demand picture changes abruptly around expiry rather than gradually. Gamma concentrated at nearby strikes is there one day and gone the next, and hedging flows that were pinning the index simply stop.
The week after the August expiry, total Nikkei options open interest went from 272,499 contracts on 17 August to 291,911 on 21 August — up 7.1% in five sessions, with puts adding 13,222 and calls 6,190. Three weeks before the September SQ, the position was already being rebuilt.
A practical consequence: the front month is not always the biggest. On 7 August 2026, one week before the August expiry, August held 169,955 contracts while September held 189,160. September is a Major SQ, so quarterly hedges concentrate there. Looking only at the nearest expiry will point you at the wrong strikes.
JPX publishes open interest by strike for the nearest three expiries every business day, free. We chart the distribution, the daily change, and the totals by expiry, so the accumulate-then-vanish cycle is visible without assembling the files yourself.
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