Expiration Date

An expiration date is the date on which a contract, option, or other financial instrument expires. After the expiration date, the contract is no longer valid and the parties involved are no longer obligated to fulfill their obligations under the contract.

For example, a stock option gives the holder the right to buy or sell a stock at a certain price on or before a certain date. If the option is exercised before the expiration date, the holder will buy or sell the stock at the strike price. If the option is not exercised before the expiration date, it expires worthless.

The expiration date is an important factor to consider when trading options. If you are buying an option, you want to make sure that you have enough time to make a profit before the expiration date. If you are selling an option, you want to make sure that the option expires worthless so that you do not have to deliver the underlying asset.

There are a few different types of expiration dates. The most common type is a European-style option, which can only be exercised on the expiration date. American-style options can be exercised at any time before the expiration date. Bermudan-style options can be exercised on certain dates before the expiration date.

The expiration date is also important for futures contracts. A futures contract is a contract to buy or sell a commodity or financial instrument at a certain price on a certain date. The expiration date of a futures contract is the date on which the contract expires and the parties involved are obligated to fulfill their obligations under the contract.

For example, a corn futures contract gives the holder the right to buy or sell corn at a certain price on a certain date. If the contract is exercised before the expiration date, the holder will buy or sell the corn at the contract price. If the contract is not exercised before the expiration date, it expires worthless.

The expiration date is an important factor to consider when trading futures contracts. If you are buying a futures contract, you want to make sure that you have enough time to make a profit before the expiration date. If you are selling a futures contract, you want to make sure that the contract expires worthless so that you do not have to deliver the underlying commodity.