Expiration Date
An expiration date is the date and time after which an option or expiring derivatives contract is no longer active.
✦ Key Insight
Time remaining affects option value and determines when positions must be managed or settled.
✕ Common Misconceptions
Check the exact timezone, exercise style, and settlement method because they differ across venues.
Detailed Explanation
In Practice
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Settlement
Settlement is the final completion of a financial transaction or contract, including transfer of assets, cash, or contractual value.
Call Option
A call option gives its holder the right, but not the obligation, to buy an underlying asset at a specified strike price before or at expiration, depending on the contract style.
Put Option
A put option gives its holder the right, but not the obligation, to sell an underlying asset at a specified strike price before or at expiration, depending on contract style.
Strike Price
The strike price is the predetermined price at which an option can be exercised according to its contract terms.
Theta
Theta estimates how an option's value changes as time passes, all else equal.