When End Phone Options Expire?
Phone options are contracts that confer the alternative holder the correct to buy the underlying inventory or other security at a particular bill. Every choice Business agreement has a particular expiration lifetime by which the Business agreement must be exercised or allowed to run out. Options enjoy standardized expiration dates, and all ring options on stocks for a particular month Testament expire at the corresponding eternity.
Option Cycles
Telephone options are listed with an expiration in a particular month. Everyone inventory with options trading against it Testament obtain phone options listed on at least a quarterly rationale. Some stocks alpha the quarterly turn in Jan, followed by Apr, The middle of summer and Oct. Other stocks Testament commence the cycle in Feb and others in Walk. Most stocks Testament very enjoy an possibility Business agreement listed for the alongside calendar month. For instance, if a stock has option trading on the February, May, August, November cycle, after the May contract expires, options will start trading for the June expiration. If the share price of the stock is below the strike price of the call option, the option is said to be out-of-the-money. If the share price is above the call option strike price, the option is classified as in-the-money. If a call option is OTM at expiration, the option will expire worthless.
In-the-Money Expiration
Option trading will be available until the stock market closes on that Friday. If the third Friday of the month is a holiday, the last day of trading is on Thursday.
Effects
Call options have a strike price, which is the price an option holder will invest in the underlying stock if the trader elects to exercise the contract. Stocks with active option trading can have expirations every month.
Expiration Date
The expiration date for call options on stocks is the Saturday following the third Friday of the expiration month. This means that the third Friday of the month is the last day to trade the options with expiration in the month.A call option that reaches the expiration date and is ITM will be automatically exercised. A trader who holds a call option that is ITM when the market closes on Friday will own the underlying stock in her account when the market opens on Friday. The trader must have enough money in the account to invest in stock. The trader who sold the call option must have the shares in his account to deliver to the option holder. If he does not have shares in the account, his broker will buy the shares on the open market when it opens on Monday and charge the cost to the trader's account.
Considerations
Option traders should monitor their open option positions and the value of the underlying stock closely on the Friday expiration date. A rapid stock price change near the end of the trading day can move a call option from OTM to ITM, resulting in an automatic exercise. Traders can elect to shut an OTM position before expiration to avoid a last-minute surprise. Call option holders can close a position by selling the call option contracts. The option seller can buy back the sold contracts.
