Option Expiration
The date on which an options contract expires and must be exercised, sold, or allowed to lapse worthless.
What is Option Expiration?
Option expiration is the date and time after which an options contract is no longer valid. At expiration, the option holder must decide whether to exercise the option (if it is in the money), sell it in the market, or let it expire worthless. For U.S. equity options, the standard expiration is the third Friday of each month, with many stocks and ETFs also having weekly expirations (typically every Friday). The time remaining to expiration is a key driver of an option's time value — as expiration approaches, time value decays (theta), accelerating sharply in the final weeks. European-style options can only be exercised at expiration; American-style options can be exercised any time before expiration.
Example
A trader holds 10 call option contracts on a stock with a $100 strike expiring on the third Friday of the month. On expiration morning, the stock trades at $108. The trader chooses to exercise the calls, buying 1,000 shares at $100 (10 contracts × 100 shares) and immediately selling them at $108 for an $8,000 gross profit. Alternatively, they could sell the options in the market, which still carry intrinsic value plus any remaining time value.
Source: FINRA — Options Expiration