Expiration date (redirected from Exercise Date)
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Related to Exercise Date: Exercise notice
, Exercising an Option
The last day (in the case of American-style)
or the only day (in the case of European-style) on which an option
may be exercised
. For stock options
, this date is the Saturday immediately following the third Friday of the expiration
month; brokerage firms may set an earlier deadline for notification of an option
holder's intention to exercise
. If Friday is a holiday, the last trading day
will be the preceding Thursday.
The date by which an option contract
is abandoned and becomes worthless unless it is exercised. In an option contract, the holder
has the right, but not the obligation, to buy
(depending on the type of option) the underlying asset
within a certain period of time. The expiration date is the time at which the holder will lose the right to exercise the option. A European option
can only be exercised on the expiration date, while an American option
can be exercised at any point prior to the expiration date.
The last day on which an option holder may exercise an option. This date is stated in the contract at the time the option is written.
The expiration date is the day on which an options contract expires and becomes worthless. Listed options always expire on the Saturday following the third Friday of their expiration month.
For example, if you hold an American-style September equity option, you can exercise it any time before the end of trading on the third Friday in September, or whatever cutoff time your brokerage firm sets. In contrast, European-style options can be exercised only at expiration, usually on Friday.
Under specific circumstances, listed options will be exercised automatically at expiration unless the owner gives instructions not to exercise them.
Unlike the standard term of a listed option, the expiration date of an over-the-counter option is negotiated at the time of the trade.