What is an option expiration?

Option expiration refers to the expiration date of an option contract, which is the last date on which the holder of a long option may exercise the contract.

Unlike a stock, each option contract has a set expiration date. The expiration date significantly impacts the value of the option contract because it limits the time you can buy, sell, or exercise the option contract. Once an option contract expires, it will stop trading and either be exercised or expire worthless.

Option expiration is the date an option contract ends - the last day it can be exercised.

Unlike stocks, each option contract has a fixed lifespan which concludes on its expiration date. That time limit is a key driver of value: as expiration approaches, the option loses time value.

At expiration, the contract stops trading. If it’s in the money, it may be exercised; if not, it expires worthless.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Options Disclosure Document. Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.