Definition: The date on which the holder of an option loses the ability to exercise it. If an “in the money” option is not exercised on or before that date, any profit that could have been achieved will be lost forever.
Example: Monthly options expire on the third Friday of any month for which an option exists. In the month of September, 2017, the 1st, 8th, 15th, 22nd, and 29th are Fridays. Monthly options expired the 15th because that is the 3rd Friday.
Investeach explains: One of the reasons why options are so risky is that time works against the option owner. All options eventually expire. If the stock price doesn’t go in the direction the option investor needs by the expiration date, the entire premium paid for the option may be lost.
Riddle me this:
1. On which date during a month will an option expire?
2. Options with which status should always be exercised before expiration date?