OptionsAcademy

The expiration date is the final date by which you must buy, sell, or exercise an option. After this date, the option no longer exists.

When Options Expire

In the United States, options expire on the third Friday of each month at 4:00 PM Eastern Time. This is when standard monthly options stop trading.

Weekly options expire every Friday. Quarterly options expire in March, June, September, and December.

What Happens at Expiration

If you own an option at expiration:

• If it's out-of-the-money (worthless), it expires and you lose the money you paid for it.
• If it's in-the-money, it's automatically exercised. You take ownership of the stock (if you bought a call) or the stock is taken from you (if you sold a call).

If you own a put at expiration:

• If it's out-of-the-money (worthless), it expires worthless.
• If it's in-the-money, you can force someone to buy shares from you at the strike price.

Time Decay

As the expiration date gets closer, the time value of an option decreases. This decay accelerates in the final weeks before expiration. Owners lose money because of time decay, while sellers profit from it.

Closing Before Expiration

Most traders close their options before expiration instead of taking delivery or assignment. This is safer and gives you more control over your exit.

Related: Time Decay, Exercise & Assignment