Thursday, July 31st, 2014

When Do Options Expire?

 

A useful piece of information in knowing how to trade stock options is knowing when do options expire. This is basically necessary for options trading as an expired option is a worthless option. When do options expire depends to a degree on the type of option. Regular options expire on the Saturday following the third Friday of each month. If the Friday is a holiday then the expiration is on the Friday. Quarterly options expire on the last open market day of March, June, September, and December. Not all equities have options expiration dates in all months. When do options expire depends upon whether the option is regular, quarterly, weekly, or a LEAP. An equity such as a stock or ETF may have options available in one options expiration cycle, two, or all four.

All optionable equities are traded as regular options. When do options expire for the regular category is, as mentioned above, every month. A regular option will be available for the current month and the next three in succession, always expiring on the Saturday after the third Friday unless the Friday is a holiday in which case the option will expire on the Friday. Regular options contracts are for three months so there is a January cycle, February cycle, and March cycle. The January cycle expires in January, April, July, and October. The February cycle expires in February, May, August, and November. The March cycle expires in March, June, September, and December. When do options expire on a stock is important when deciding when to buy puts and when to buy calls on a stock. The trader will consult the calendar to make sure.

When do options expire on quarterly options? Quarterly options on a stock are only available for four expiration dates a year. These expire on the last trading day of the month for March, June, September, and December. Aside from the reduced number of expiration dates each year how to trade options on quarterlies is the same as on regular options. Quarterlies are typically listed with Q1, Q2, Q3, or Q4 preface indicating the quarter in which they expire. When do options expire for LEAPs? These are long term options contracts and are not available for all stocks. LEAPs stands for Long-Term Antici-Pation Securities. These are available in contacts of up to 39 month duration and expire in January only. They expire on the same day as regular options for that month.

The last batch of options is the weeklies. When do options expire for weeklies and how do options work on weeklies? These options contracts begin on Friday and end on the next Friday. Currently more than 30 Indexes, Stocks and Exchange Traded Funds are traded as options on the CBOE. The CBOE web site lists all of these under the AVAILABLE WEEKLYS category. Traders choose to trade given types of options for specific reasons. Weeklies give the trader a degree of flexibility that may provide more targeted trading opportunities and allow investors take advantage of market events, such as earnings, Fed announcements and government reports.

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