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Market Structure

Expiration Date (Options)

The last day an option contract is valid. After this date, unexercised options expire worthless.

What is the expiration date?

The expiration date is the last day an option contract is valid. After market close on that date, the contract either settles with its remaining intrinsic value or expires worthless. An option that has expired cannot be traded.

Standard expirations

Most equity options expire on Fridays. The most common types are:

  • Weekly: expires the nearest Friday. Cheapest premiums but fastest time decay.
  • Monthly: expires the third Friday of the month. Usually the most liquid contracts.
  • LEAPS: long-dated contracts expiring 9 months to 3 years out. Used for long-term directional plays.
  • 0DTE: expires the same trading day.

Why it matters

Time is an option buyer's enemy. Every day that passes erodes the option's extrinsic value through time decay. The closer to expiration, the faster that decay accelerates. Beginners are usually better off with 2 to 4 week expirations, which give the thesis time to play out without bleeding value too fast.

Related Terms

0DTE (Zero Days to Expiration)

Options that expire the same trading day they are held. Cheap, volatile, and dominated by time decay.

Exercise (Options)

Using the right granted by an option contract to buy (call) or sell (put) the underlying stock at the strike price.

Options

Contracts that give the buyer the right, but not the obligation, to buy or sell a stock at a specific price before a specific date.

Strike Price

The fixed price at which an option contract lets you buy (call) or sell (put) the underlying stock.

Theta (Time Decay)

The amount an option loses in value each day from time passing. Accelerates as expiration approaches.