Expiration Time

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Definition of 'Expiration Time'

Expiration time is the date and time when an option contract expires. It is the date on which the option holder must exercise the option or let it expire worthless.

The expiration time is usually specified in the contract terms. For example, a call option may have an expiration time of 12 months from the date of purchase. This means that the option holder has 12 months to exercise the option or let it expire.

If the option holder exercises the option, they will buy the underlying asset at the strike price. If the option holder does not exercise the option, they will lose their investment.

The expiration time is an important factor to consider when trading options. It is important to make sure that you have enough time to exercise the option if you want to do so. If you do not have enough time, you may have to sell the option before it expires.

The expiration time can also affect the value of the option. An option that is about to expire is worth less than an option that has more time to expiration. This is because the option holder has less time to make a profit on the option.

Expiration time is an important concept to understand when trading options. It is a factor that can affect the value of the option and the decision of whether or not to exercise the option.

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