Simply stated, when an option expires, it ceases to exist.  After expiration, the owner of the option has no rights, and the seller of the option has no obligations.  An option holder must decide what to do with their option before the expiration date.  According to Investopedia, “the concept of time is at the heart of what gives options their value.”

When do Options Expire?

The Options Industry Council states “Options that expire in a given month usually expire on the third Friday of the month.  Therefore, this third Friday is the last trading day for all expiring equity options.”  If the third Friday is an exchange holiday, the last trading day is the Thursday preceding the exchange holiday.

There are also weekly options.  Weekly options expire every week, at market close on Friday.

What Time do Options Expire?

The expiration time is important to keep in mind for options, in addition to the date.  The Nasdaq says expiration time is “The time of day by which all exercise notices must be received on the expiration date. Technically, the expiration time is currently 11:59AM on the expiration date, but public holders of option contracts must indicate their desire to exercise no later than 5:30PM on the business day preceding the expiration date. The times are Eastern Time. See also Expiration Date.”  So therefore, one must make one’s decision by 5:30 p.m. EST the day before an option expires.

The Expiration Calendar

The Options Clearing Corporation has a nice calendar that shows the expiration date of options.

Assignment

When a call or put option holder decides to exercise their option, the option writer will receive an exercise notice and will be required to either sell or buy the required number of shares at the strike price (as per the terms of the options contract).  According to Options Alpha video on “Options Expiration & Assignment,” “the vast majority of options are assigned the week of expiration – and really the last few days.”

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