What is an 'Expiration Date (Derivatives)' An expiration date in derivatives is the last day that a derivative, such as or, is valid. On or before this day investors will have already had to decide what to do which their expiring position. Before an option expires, those that own the option can choose to the option, close the position to realize their profit or loss, or let the contract expire worthless. Futures traders holding the expiring contract must close it on or before expiration, often called the 'final trading day,' to realize their profit or loss. Alternatively, they can hold the contract and ask their broker to buy/sell the underlying asset that the contract represents. Retails traders don't typically do this, but business do, such as an oil producer using futures contracts to sell their oil.

Roll forward refers to extending the expiration or maturity of an option, futures contract, or forward by closing the initial contract and opening a new longer-term contract for the same.

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Futures traders can also ' their position. This is a closing of their current trade, and an immediate reinstitution of the trade in a contract that is further out from expiry. • • • • Breaking Down 'Expiration Date (Derivatives)' Expiration dates, and what they represent, vary based on the derivative being traded. Smart forex forex strategy calculator. The expiration date for listed stock options in the United States is normally the third Friday of the, which is the month when the contract expires.

However, when that Friday falls on a holiday, the expiration date is on the Thursday immediately before the third Friday. Once an options or futures contract passes its expiration date, the contract is invalid. The last day to trade equity options is the Friday prior to expiry. Therefore, traders must decide what to do with their options by this last trading day. Some options have an automatic exercise provision. These options are automatically exercised if they are (OTM) at the time of expiry. If a trader doesn't want to be exercised, they must close out or roll the position by the last trading day. Index options also expire on the third Friday of the month, and this is also the last trading day for.