Expiration date

An expiration date is the last day an options contract can be traded or exercised. After it passes, the contract either settles (if it is in the money) or expires worthless.

How it works

Standard monthly US equity options expire on the third Friday of the month. Many stocks and ETFs also have weekly options that expire on other Fridays, and the most active index and ETF products have expirations every trading day. When an expiration Friday is a market holiday, expiration generally moves to the prior trading day.

Trading in equity options stops at the end of the regular session on expiration day. Options that finish in the money by $0.01 or more are generally exercised automatically unless the holder instructs otherwise. Quarterly expirations in March, June, September and December, when stock options, index options and index futures expire together, are often called triple witching.

Why it matters for traders

• Time decay accelerates. Options lose extrinsic value fastest in the final weeks and days, which is what theta measures.
• Expiration flows move stocks. Large open interest at a strike can lead to "pinning," where a stock gravitates toward that strike as dealers adjust hedges into the close.
• Pin risk. A short option seller cannot be sure whether a contract right at the strike will be exercised, which can leave an unexpected stock position over the weekend.
• Catalyst timing. Traders pick expirations that fall after an earnings date or a PDUFA date so the option is still alive when the news hits.

Example

On a Monday, Fabrikam Software (FBKM) trades at $80 and reports earnings Thursday after the close. A trader compares the $85 call expiring that Friday at $1.20 with the $85 call expiring in five weeks at $3.40. The weekly is cheaper but leaves only one trading day after earnings for the move to show up; the five-week option costs more but gives the trade time.

FAQ

What time do stock options expire?

Trading in standard equity options ends at the close of regular trading (4:00 p.m. ET) on expiration day. Exercise instructions can typically still be submitted for a short window afterward, subject to broker cutoffs.

What happens to an out-of-the-money option at expiration?

It expires worthless and is removed from your account. The buyer loses the premium paid and the seller keeps it.