finance Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...

, 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 relation to property (see below) and ...

(represented by

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

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 mens ...

and debited to the

short position In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common long position, where the investor will profit if the market value ...

holders. Typically,

exchange-traded An exchange-traded product (ETP) is a regularly priced security which trades during the day on a national stock exchange. ETPs may embed derivatives but it is not a requirement that they do so – and the investment memorandum (or offering docume ...

option contracts expire according to a predetermined

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 calendar date, date is the designation of a single and specific day within such a system. A calendar is ...

. For instance, for U.S. exchange-listed equity 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 the Money'' is a 1958 American comedy film directed by William Beaudine and starring The Bowery Boys. The film was released on February 16, 1958, by Monogram Pictures, Allied Artists Pictures and is the 48th and final film in the series. It ...

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 Out or OUT may refer to: Arts, entertainment, and media Films * ''Out'' (1957 film), a documentary short about the Hungarian Revolution of 1956 * ''Out'' (1982 film), an American film directed by Eli Hollander * ''Out'' (2002 film), a Japanese ...

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