Expiration date (Expiry date) is a date determined in an option contract as the last day for buying/selling a contract and the last day when the holders can exercise their rights listed in the contract.
Options have expiration dates defined by 3 fixed cycles:
- The January / April / July / October cycle
- The February / May / August / November cycle
- The March / June / September / December cycle
Each asset has its own main cycle. This is due to the moment when stocks become the optionable securities. In addition to the main cycle, the next two months are also traded if they are not included in this cycle. All such options are considered as short-term option contracts.
New strike prices become available for trading as soon as there is a sufficient amount of people willing to buy or sell. The existence of different main cycles for the underlying assets included in the portfolio gives a significant advantage to investors due to a broad diversification of the investment portfolio.
Options trading is good for traders who want to consciously control risks and at the same time are ready to invest a substantial amount in trading. To better understand how to trade options, read our articles on strategies and option screener that finds the most attractive trading signals. This method is perfect both for beginners and more experienced traders.