an option s expiration is the specific date and time when the option contract becomes invalid the expiration date is critical for both the option s buyer and seller for american options the buyer can exercise the option at any point up to and including the expiration date for european options the holder can only exercise the option on the expiration date itself 1
the expiration date is crucial for an investor when dealing with options since it significantly affects the option s value and the strategies an investor may employ the date is almost always clearly stated in the option contract options can have various expiration periods ranging from as short as one day to several months or even years most equity options are american style while index options like those for the s p 500 are european style option types based on their expiration dateoptions expiration dates take several forms european style options can only be exercised on their expiration date while american style options can be exercised any time before their expiration date here are some different lengths of time available each type of expiration caters to different trading strategies and risk appetites making it essential to understand their characteristics monthly contract expirationone of the most commonly traded types of options has monthly expirations these contracts expire on the third friday of each month and are considered the standard for many individual investors and traders here are the monthly contract s key features weekly contract expirationweeklys offer a faster pace of trading unlike the standard monthly options that expire on the third friday of each month weeklys typically expire every friday providing four or five opportunities to trade in a single month here are some of the weeklys key features daily expiring optionsdaily expiring options also called zero days to expiration options 0dte offer the ultimate in short term trading opportunities generally expiring at the end of each trading day these are the go to for traders looking to profit from intraday and overnight market movements here are some of their key features 