Expiration day for equity and index options is the third Friday of the expiration month. If the third Friday falls on an exchange holiday, the expiration date will move to the Thursday preceding the third Friday. For equity options, the expiration options is the third Friday of the expiration month. Last last day to trade expiring equity options is the Friday before expiration, or the third Trade of the month.
This is also generally day last day an investor may notify his brokerage firm of his intent to exercise an expiring equity call or put. Brokerage firms, however, may set an earlier deadline for notification of an option buyer's intention to exercise. Check with your brokerage firm about its procedures and deadlines for instruction to exercise any equity options. If Friday is a holiday, the last trading day will be the preceding Thursday. For American-style index option contracts the last trading day is generally the third Friday of the expiration month, unless that day is an exchange holiday in which case the last trading day will be the previous day, or Thursday.
For European-style index option contracts the last trading day will be the business day generally a Thursday preceding the day on which the exercise settlement value is calculated generally the third Friday of the month unless that day is a holiday.
An American-style index option may be exercised at any time prior to its expiration, or at any time up to and including the Third Friday of the expiration month. A European-style index option may be exercise only during a specific period of time just prior to its expiration - generally on the last Friday prior to its expiration date.
The Options Clearing Corporation has provisions for the automatic exercise of certain in-the-money options at expiration, a procedure also referred to as expiration by exception. However, a specific brokerage firm's threshold for such automatic exercise may or may not be the same as OCC's.
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, last 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 Trade 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 last 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 day. 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 before 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 before expiring contracts that are exactly at-the-money at expiration to acquire or sell underlying shares for adjusting their option risk day the close of trading. TradeStation Voted Best for Options Traders 2 Years in a Row by Barron's. Options involve risk and are not suitable for all investors.
Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options ODD. Options of the ODD are available from your options or from The Options Clearing Corporation, One North Wacker Drive, SuiteChicago, Illinois The information on this website is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current.
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My Account Expiration Settings Sign Out. Options Quick Facts - Before, Exercise and Assignment. When do options expire?
When is the last day to trade or exercise an equity option? When is the last day to trade an index option? This depends on whether the option is American- or European-style: When is the last day to exercise an index option? What is "automatic exercise" of an option? When and how is an equity option exercised?
Must you exercise an expiring in-the-money equity option? What happens to my long option if I never sell or exercise it? How do you nullify the obligations of a short call or put? When can you be assigned on a short equity option position?
When will notice of assignment on a short contract be received? Will you be assigned on an equity option contract that expires exactly at-the-money? What happens to my short option if I am never assigned? When might I anticipate early assignment on a short equity call? When might I anticipate early assignment on a short equity put? If my short equity option closes.
If my short equity option closes exactly at-the-money on expiration Friday expiration I be assigned? CBOE Links Government Relations Investor Relations CBOE Livevol Data Shop Livevol CBOE Media Hub System Status Chinese Language Site Risk Management Conference Careers Advertise with CBOE CBOE. Other CBOE Sites CBOE Futures Exchange C2 Exchange Trading Permit Holders. CBOE Options involve risk and are not suitable for all investors.