An expiration time is the date and time when an option contract expires. The expiration time for most options is the third Friday of the month in which the contract expires. However, options on some ETFs and indexes may have different expiration days and times.
If you own an option contract, you have the right, but not the obligation, to buy or sell the underlying asset at a specified price before the expiration date. If you don’t exercise your option before the expiration date, your option contract expires and you will no longer have any rights under the contract.
The expiration time is an important part of an option contract because it determines when the contract expires and, therefore, when you can no longer exercise your right to buy or sell the underlying asset. What happens when long calls expire? The underlying security of a long call option position will continue to be held by the option holder until the option expires. If the price of the underlying security has not risen above the strike price by expiration, then the option will expire worthless and the option holder will lose the entire premium paid for the option. What happens when a call option hits the strike price? When a call option hits the strike price, the option holder has the right to buy the underlying asset at the strike price. If the underlying asset is trading below the strike price, the option will expire worthless. If the underlying asset is trading above the strike price, the option will be exercised and the option holder will buy the asset at the strike price.
What makes an option price go up?
There are a number of factors that can cause the price of an option to go up. The most common is simply an increase in the underlying asset price. Other common causes include an increase in volatility or the passage of time (as options tend to lose value as they approach expiration). More exotic causes can include things like changes in interest rates or dividend payments.
Where does the money from expired options go?
When an option expires, the money goes to the person who holds the other side of the contract. So, if you bought a call option and it expires in-the-money, the person who sold you the option must give you the intrinsic value of the option. Similarly, if you sold a put option and it expires in-the-money, you must give the intrinsic value of the option to the person who bought it from you.
What happens if I not sell options on expiry? If you don't sell your options on expiry, there are a few different things that could happen, depending on the type of option you have and whether it is in or out of the money.
If you have a call option that is in the money, the option will be automatically exercised and you will be assigned the underlying shares. If the option is out of the money, it will expire worthless.
If you have a put option that is in the money, the option will be automatically exercised and you will be assigned the underlying shares. If the option is out of the money, it will expire worthless.
If you have a call option that is out of the money, it will expire worthless.
If you have a put option that is out of the money, it will expire worthless.