Expiration des options hebdomadaires
With the introduction of weekly options into the mix, we now have options that expire every single Friday. See the full definition for expiration in the English Language Learners Dictionary. If you have a short option that goes in the money into expiration, you must fulfill that transaction. If you're an option buyer, you can use that contract at any time.
Breaking Down 'Expiration Date (Derivatives)'
An investor with a long equity call or put position may exercise that contract at any time before the contract expires, up to and including the Friday before its expiration.
To do so, the investor must notify his brokerage firm of intent to exercise in a manner, and by the deadline specified by that particular firm.
An investor with an expiring long equity call or put position that is subject to automatic exercise does not have to exercise the contract. Instructions may be given through a brokerage firm to OCC not to exercise a call or put that is in-the-money by any amount. After its expiration date a call or put will cease to exist.
If you own an option and it expires unexercised, you no longer have any of the rights inherent in that contract and you lose the premium you paid for it, plus any commissions and fees you incurred at its purchase.
You are free to close out a long call or put before expiration by selling it if it has market value. Any investor with an open short position in a call or put option may nullify the obligations inherent in that short or written contract by making an offsetting closing purchase transaction of a similar option same series in the marketplace.
This transaction must be made before assignment is received, regardless of whether you have been notified by your brokerage firm to this effect or not. As an equity call or put option holder may exercise the contract at any time before it expires, an equity option writer may be assigned an exercise notice at anytime before expiration. Generally, brokerage firms will deliver notice of assignment on short option positions on the business day following an option owner's exercise of a similar option.
Check with your brokerage firm about its procedures and timing for such notification. Some professional traders will exercise an expiring call or put that is exactly at-the-money, therefore assignment on such a short contract is possible. If you have written an option and are not assigned an exercise notice before it expires, you no longer have any of the obligations inherent in that contract and you keep the premium you received for it, less any commissions and fees you incurred at its initial sale.
You are free to close out a short call or put before expiration by purchasing a like contract in the marketplace. When an underlying stock is about to pay a regular, cash dividend investors with short positions in near-term, in-the-money calls might anticipate assignment. Assignment is more likely when the dividend amount is greater than the time value remaining in the call's current premium amount. Many professional option traders will exercise deep in-the-money puts when expiration nears and there is little or no time value remaining in the options' premium.
For this reason, an investor with a short position in such contracts might expect early assignment. Many option traders both professionals and individual investors will exercise, as they have the right, an expiring option that is in-the-money by any amount, even though this amount may be less than OCC's thresholds for automatic exercise. Therefore, you might anticipate assignment on any in-the-money option at expiration. This is entirely possible, though not predictable.
On occasion, option professionals will exercise expiring contracts that are exactly at-the-money at expiration to acquire or sell underlying shares for adjusting their option risk after the close of trading.
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First Known Use of expiration , in the meaning defined at sense 1a. Learn More about expiration. Resources for expiration Time Traveler!
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