What Is Expiration Date? Meaning & Example
Definition
The expiration date is the last day an option contract is valid. After it, the option either is exercised, assigned or expires worthless.
Related terms
Theta measures how much an option's value declines each day as expiration approaches, all else equal. This time decay works against option buyers and in favor of sellers.
OptionAn option is a contract giving the buyer the right, but not the obligation, to buy or sell an asset at a set price before or on a certain date. Options can be used for income, hedging or speculation.
AssignmentAssignment happens when an option seller is required to fulfill the contract because the buyer exercised it. Call sellers deliver shares; put sellers buy shares at the strike.
What is Expiration Date?
The expiration date is the last day an option contract is valid. After it, the option either is exercised, assigned or expires worthless.
Can you give an example of Expiration Date?
A monthly option might expire on the third Friday of the month.