Expiration (options)

Expiration (options)

For an option contract, expiration is the date on which the contract expires. The option holder must elect to exercise the option or allow it to expire worthless.

Typically, option contracts expire according to a pre-determined calendar. For instance, for U.S. exchange-listed equity option contracts, the expiration date is always on the Saturday that follows the third Friday of the month, unless that Friday is a market holiday, in which case the expiration is on the Friday.

In the case where the option is not exercised, upon expiration any margin charged by the clearing firm to the holder or writer of the option is released. The margin may then be used for any purpose, for instance to finance subsequent option trades.


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