finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...

, the expiration date of an

option contract An option contract, or simply option, is defined as "a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer". Option contracts are common in professional sports. An option contrac ...

(represented by

Greek letter The Greek alphabet has been used to write the Greek language since the late 9th or early 8th century BCE. It is derived from the earlier Phoenician alphabet, and was the earliest known alphabetic script to have distinct letters for vowels as ...

tau, τ) is the last date on which the holder of the option may exercise it according to its terms. In the case of options with "automatic exercise", the net value of the option is credited to the

long Long may refer to: Measurement * Long, characteristic of something of great duration * Long, characteristic of something of great length * Longitude (abbreviation: long.), a geographic coordinate * Longa (music), note value in early music mensu ...

and debited to the short position holders. Typically, exchange-traded option contracts expire according to a pre-determined

calendar A calendar is a system of organizing days. This is done by giving names to periods of time, typically days, weeks, months and years. A date is the designation of a single and specific day within such a system. A calendar is also a phy ...

. For instance, for U.S. exchange-listed

equity Equity may refer to: Finance, accounting and ownership *Equity (finance), ownership of assets that have liabilities attached to them ** Stock, equity based on original contributions of cash or other value to a business ** Home equity, the diff ...

stock option contracts, the expiration date is always the Saturday that follows the third Friday of the month, unless that Friday is a market holiday, in which case the expiration is on Thursday right before that Friday. The clearing firm may automatically exercise by exception any option that is

in the money In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option. Moneyness is firstly a thr ...

at expiration to preserve its value for the holder of the option and at the same time, benefit from the commission fees collected from the account holder. However, the holder or the holder's broker may request that the options are not exercised automatically. Out of the money options are not exercised automatically. Upon expiration any

margin Margin may refer to: Physical or graphical edges * Margin (typography), the white space that surrounds the content of a page *Continental margin, the zone of the ocean floor that separates the thin oceanic crust from thick continental crust *Leaf ...

charged held by the clearing firm of the holder or writer of the option is released back to the free balance of the trader's account.

References

External links

The Options Clearing Corporation - Option Expiration Calendar
Options (finance) Settlement (finance) {{Finance-stub sv:Derivatinstrument#Terminologi inom derivathandel

See also

References

External links