Glossary
Expiration date
The last day an option or futures contract is valid, after which it is exercised, settled or expires worthless.
The expiration date is the final day a derivative contract exists. For an option, it is the last day the right to buy or sell can be used; afterward, an in-the-money contract is exercised or cash-settled and an out-of-the-money one vanishes. For a futures contract, it is when the remaining positions are settled by delivery or cash. Expiration drives an option's time value, its theta decay and many traders' calendars.
How it works for options
Standard monthly US equity options expire on the third Friday of the month; when that Friday is an exchange holiday, expiration moves to the Thursday before. Many stocks, ETFs and indexes also list weekly expirations, and the most active index products now have contracts expiring every trading day. Trading in most equity options stops at the 4:00 p.m. ET close on expiration day.
For futures
Futures follow each exchange's contract calendar. US stock index futures such as the E-mini S&P 500 have quarterly expirations (March, June, September and December), settled in cash against a special opening quotation. Physically delivered contracts, such as crude oil, stop trading before the delivery period, which is why most traders roll before expiry.
What to watch for
Positions left open into expiration can produce surprise exercise or assignment, after-hours price moves that change the outcome, and pinning around popular strikes. Check your broker's cut-off times for closing or giving instructions; they are often earlier than the exchange's.