Greetings, guests and subscribers! Life is full of paradoxes. Take this example: the more information is available on the Internet, the more difficult it is to find it there.

By the way, this is the most popular instrument among clients of the Moscow Exchange. In 2016, 25-30 thousand traders worked with him monthly. Once an instrument is selected, complete information about currently traded options for that instrument is displayed.

These lists are grouped by expiration dates. When you click on a specific date, you get all options for that date.

Another popular instrument on the MICEX is futures on (). On January 26, 2017, trading of weekly options on it was launched. These options expire every Thursday. Conveniently, weekly options are not traded on the expiration dates of monthly options.

How options expire

Let's consider an example of buying a put option on some futures.

Suppose that at the time of purchase the option cost 10 rubles, and the strike price was 100 rubles. This means that the breakeven point is at the level of 90 rubles. At any spot price below 90 rubles, the option buyer makes a profit (see chart). The difference between the strike and spot prices is called variation margin.

The whole process can be described step by step with the following simplified diagram:

1. The option premium is paid. The buyer (trader) has a current loss of 10 rubles
2. During option expiration, the spot price is 80 rubles
3. The futures are delivered at the strike price of the option equal to 100 rubles
4. Since the futures were purchased at 100 rubles, and the spot price is 80 rubles, the variation margin will be 20 rubles. Minus the option premium (10 rubles), the net profit will be 10 rubles
5. The futures guarantee is blocked on the trader's account, and the trader becomes the owner of the open futures position

Very often, closer to the expiration time, the option price is actively growing and it is more profitable for the buyer to sell the option without waiting for its execution. By the way, as statistics show, more than half of buyers do just that.

Firstly, there is no guarantee that the price of an asset will not go into the loss zone, and secondly, beginners (and not only them) sometimes find themselves in a difficult situation when a unprofitable futures position is opened with high leverage.

In addition, the volatility of the option price can significantly exceed the asset, which makes the option an independent trading instrument.

By protecting his interests, the option seller tries to hedge risks. If a put option is sold, the lower the price of the asset as expiration approaches, the greater the likelihood that the seller will incur a loss. Therefore, for hedging purposes, the seller may open a short position in the underlying asset.

Accordingly, the seller of the call option has opposing interests and buys the asset.

The conflict between these interests leads to sharp price fluctuations just before expiration.

Accordingly, after expiration, the number of players in the market and open positions in the underlying asset decreases sharply, which can lead to problems with controlling open positions in a “thin” market. Therefore, novice options traders are advised not to wait for expiration if possible.

However, there is one small loophole for the case when the loss upon option expiration is already obvious, but there is a high probability of a trend change. You can exchange an expiring option for another option that has a later expiration time.

This mechanism is called rollover. roll-over– roll). Of course, everything costs money, but sometimes it is more profitable to wait.

Small addition

In binary options, expiration time means something completely different than in stock options. First of all, the very concept of an option there means that the price will be higher or lower than the current one. There is another option when the price touches a certain level or is considered to be in a certain interval.

The player looks at the price chart of the instrument (it can be generated programmatically!) and his task is to make a forecast for its further behavior.

Expiration time means when the condition will be verified. To make everything “like people”, in binary options there is also the possibility of rollover, but taking into account the already too high fee for losing, it has no practical meaning.

And in conclusion - a little intrigue. In December 2016, call options on Brent oil futures for delivery in December 2018 were in high demand on the London ICE Exchange. The price specified in the contract was $100 per barrel!

It is very difficult to predict the further development of the oil situation, and buying an option is an excellent way to hedge the risk.

Afterword

It is impossible to teach what professionals know in one short article, but this is not required. For a general idea, it is enough to explain the essence of the basic concepts in simple language.

1. Option expiration time
2. Four categories of binary options
3. What determines the expiration date of options?
4. Conclusions about options

To create a winning strategy in the binary options market, the correct choice of expiration time is very important.

The correct choice of option expiration depends on the timeframe of the strategy the trader is trading on. That is, if you are looking for entry points on M15 charts, then the expiration time should be taken in this interval. M15 – 15 minute price chart, which can be found in any Meta Trader 4 terminal.

If the strategy is on hourly timeframes, then the expiration time should be chosen from 45 minutes to 1 hour. If the strategy is M30, then the option expiration should be from 20 to 30 minutes, no more... Etc. When you build your own strategy, you will need to determine the expiration time yourself, based on the goals you are pursuing.

But do not forget that there are different types of options and these types also have different expirations. Moreover, different brokers have different types of options, assets and different expirations. Therefore, among other things, it is also important not to make a mistake in choosing a broker.

But despite all the differences, on almost any broker’s platform you can buy an option with an expiration time of 15-30 minutes 5-10 minutes before the end of this very expiration. So the expiration of your option will depend only on you. That is, you yourself are free to choose the expiration that most suits our strategy.

2. Four categories of binary options

Based on expiration time, binary options can be divided into 4 categories:

1. Ultra-short options, the duration of which is a day or less.

2. Short-term options. Lasts from one day to a week. It is advisable to close the deal before Friday, since the market is closed on weekends. And it is quite difficult to predict the changes that will occur during these days. When buying a five-day option, it is best to do this on Monday morning so that you can get the result of the operation on Friday.

3. Medium-term operations. Lasts from a week to a month.

4. Long-term options. They last from a month to a year. As a rule, they are dealt with by professionals and entire companies.

3. What determines the expiration date of options?

The expiration date may also depend on the type of option. For example, unlike a European-type option, an American option gives the right to shorten the expiration period, even when the trader has already started trading. Also, some brokers allow you to delay the expiration time. This occurs by replacing it with an option with a more distant expiration date.

If you assume that the price of an asset has not yet exhausted its full potential, you have the opportunity to extend the execution time of the transaction so that the price has time to reach its target. In the event that there is minimal time left before the option expires, this may not be such a bad idea. It happens that just at this time some important news comes out, and the likelihood of achieving the goal greatly increases.

Also, the choice of expiration date greatly depends on the asset being traded. For example, short expiration periods are more suitable for indices and commodities. This is due to the fact that such instruments are more stable, which means it becomes easier to make predictions over short periods of time. Plus, you can buy more contracts in a shorter period of time, thereby making more money.

On the other hand, for Forex market instruments it is recommended to choose a medium or long expiration period. Still, exchange rates are subject to small, but frequent and unexpected price changes. At the same time, forecasting the exchange rate for a long period is much easier. Stocks are not much different in this regard. Therefore, for stock market instruments you should choose an expiration period of several hours or more.

4. Conclusions about options

Choosing the right expiration time is very important to create a win-win strategy in the binary options market. But before choosing an expiration time, you should analyze the current chart. To understand how to trade binary options correctly, it is important to understand how charts work. Also, to avoid mistakes, and sometimes to increase your profits, you should use the expiration date correctly.

Expiration- the moment of option exercise. Conventionally, all trading instruments available to speculators can be divided into groups. If we look at the list of binary options available for purchase, we will notice that there are contracts that should be executed in just a few minutes, others have hours left until completion, but there are also those whose expiration will occur only in a few days.

Most binary options brokerages offer a variety of contracts. For example, below you can see that EUR/USD can be purchased with a wide variety of expiration times.

Some companies even offer contracts of 30 seconds, 60 seconds, and so on. That is, we can purchase a binary option at any time, which must be executed, for example, in 1 minute. As a rule, such trading instruments have a lower percentage return than other options with a higher period until expiration. Binary options 60 seconds are very popular among scalpers.

In the rating of binary options brokers, you can choose a company with optimal conditions for your trading. We recommend that you pay attention to and

The less time remains until the option is exercised, the more difficult it is, as a rule, to predict the outcome of the event. However, scalpers anticipate moments in the market when, from their point of view, the situation with a trading instrument is as clear as possible. At such moments, transactions are concluded to purchase short-term binary options, usually within 60 seconds.

Let's look at the example of one of the brokerage companies to see how changing the option execution time affects the profit percentage on transactions:

• 60 seconds - 67%
• 5 minutes - 83%
• 90 minutes - 83%
• 1 day - 70%
• 2 weeks - 65%

Perhaps it makes sense to start trading in the binary options market by studying the tariffs in order to immediately begin training in order to expiration time which generates the most income. It can be seen that in the example above, the most profitable deals are obtained within the range of 5 minutes and a couple of hours.

In different companies, rates, as well as interest priorities, may be different, so the above example should not be regarded as an unambiguous recommendation.

Each speculator can choose independently with what time options expiration work. Modern trading conditions allow you to trade binary options, the execution time of which ranges from 1 minute to several weeks. In some cases, it is possible to trade instruments whose execution time is generally 30 seconds.

Each time period of the contract has its own trading systems. Thanks to the systematization of trading, speculators have a real opportunity to make money on the market not randomly, but systematically, which is potentially more stable.

(from the English expiration - end, completion, expiration) - the process of completing the circulation of derivatives contracts (futures and options) on the exchange. Expiration is actually the date when obligations under futures and options are fulfilled (i.e., the delivery of an asset and/or mutual settlements between the parties to the transaction took place).

Futures contracts traded on the exchange have standardized execution (expiration) dates.

Expiration of RTS index futures

So, for example, it is executed 4 times a year, commodity futures on the CME are executed every month.
Expiration dates are set in the specifications of futures contracts.

At the time of expiration, there is a struggle for their income between sellers and buyers of options. And in this struggle there are many questions:

1) the volume of the derivatives market and its proportionality to the stock market
2) distribution of assets of market participants
3) pressure from market makers

Therefore, market volatility increases during the expiration period, and the final result depends on which group wins.
When expiration reaches its minimum

the date of fulfillment of obligations under futures contracts, completion of the transaction and final settlements between the parties on futures or options, also in medicine, expiration is called exhalation, the removal of air from the lungs during breathing

Information about the concept of expiration, expiration of futures contracts, expiration of futures and options, time and expiration date, expiration date, expiration level, early expiration and its reasons, extension of the expiration period and choice of expiration date by traders

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Expiration is the definition

Expiration is termination of a derivatives contract on the foreign exchange, commodity or stock market. Expiration is the date of completion of the transaction, final mutual settlements between the parties to the transaction and fulfillment of the main condition of the transaction. Expiration days are quite risky for financial market players due to the unpredictability of price movements, which can result in a sharp increase in market volatility.

Expiration is the completion date of the transaction.

Expiration is the expiration date of the option, the last day to exercise the option.

Expiration is expiration of the credit card.

Expiration is expiration of the contract or option.

Expiration is the process of completing the circulation of derivatives contracts (futures and options) on the exchange. Expiration is actually the date when obligations under futures and options are fulfilled (i.e., the delivery of an asset and/or mutual settlements between the parties to the transaction took place).

Expiration is exercise of options. Execution in the American stock market occurs primarily on every third Friday of the month. In Russian, in this regard, it is either the 15th day of each month, or the working day following this number, in case of a weekend.

Expiration is the expiration of the contract, that is, the period upon expiration or during which, depending on the type of binary option, its main requirement must be fulfilled.

Expiration is the expiration date of futures contracts (futures or options).

Expiration is The date on which futures or options are settled. For example, for settlement futures, mutual settlements occur between trading participants on the exchange.

Expiration is the process of completing a trade transaction or the expiration date of an option on the exchange market. In other words, the expiration of futures is the day when obligations under the future are fulfilled (i.e., depending on the type of futures - settlement or delivery - either mutual settlements occur between the parties to the transaction, or the underlying asset is delivered).

Expiration is completion of the contract, that is, the time upon reaching or during which, depending on the type of binary option, its main condition must be fulfilled.

Expiration is removing air from the lungs during breathing.

Etymology of the word expiration

The term “expiration” itself comes from the English. expiration and denotes expiration.

The medical term "expiration" comes from the word expiratio; lat. exspiro, exspiratum to blow, exhale.

Futures expiration is the process of ending circulation of the corresponding derivatives contract on the exchange market. In other words, the expiration of futures is the day when obligations under the future are fulfilled (i.e., depending on the type of futures - settlement or delivery - either mutual settlements occur between the parties to the transaction, or the underlying asset is delivered).

In practice, this concept refers to the moment when option obligations are exercised. At this moment, the underlying asset is delivered, or mutual settlements between the parties to the transaction are carried out in some other way.

The CALL option at the time of expiration can turn into a LONG futures contract at the request of the option buyer if the option exercise price (STRIKE) is lower than the price of the underlying asset EURUSD at the time of expiration. This is equivalent to buying the EURUSD pair on FOREX.

A PUT option at the time of expiration can turn into a SHORT futures contract at the request of the option buyer if the option exercise price (STRIKE) is higher than the price of the underlying asset EURUSD at the time of expiration. This is equivalent to selling the EURUSD pair on FOREX.

Note that option sellers, as a rule, carefully calculate the risks, and the overwhelming majority of option contracts simply disappear at the time of expiration. Their only result is the premium paid by the buyer of the option to the seller of the option.

Depending on the expiration date of the contract, the liquidity of a particular futures changes. The closer the expiration date, the higher the liquidity, and the further the expiration date of the futures and at the same time a contract closer to expiration is traded, the lower its liquidity will be and the higher its spreads. This feature should always be taken into account when trading futures.

At the same time, remember that literally a few days before the futures expiration, the liquidity of the contract rapidly decreases. And if you trade less liquid commodity futures, as opposed to more liquid currency or index futures, then move to the next contract well in advance. Otherwise, you may be left in a situation where before expiration you will not be able to close the trade you opened because you cannot find a counterparty.

Futures expiration time

Expiration time is The time at which the determination of gain or loss occurs is the time the option is closed. It can be at the end of the hour, day, week or month. The client determines this time himself.

Futures expiration level

The expiration level is the price of the underlying asset at the time of expiration.

Determining the expiration date of futures

The expiration date of any futures contract is fixed in the corresponding specification. A specification is a document established by the exchange, which sets out the main conditions of the futures. Specifications of all Russian futures contracts can be found on the Moscow Exchange website.

Almost all currency futures, index futures, and interest rate futures have expiration dates in March, June, September and December. Delivery months for other futures vary, so you need to look at each instrument you trade separately.

As a rule, futures expiration occurs on the 15th of the month and year of execution (if the 15th is not a working day, then expiration is carried out on the next working day after the 15th).

The expiration date of the contract can be found by its code. Each futures has two types of codes - short and full, but they carry the same information.

Using the example of futures on the RTS index:

The full code "RTS-12.12" indicates that the RTS contract is due in December 2012;

The short code “RIZ2” stands for: “RI” - contract for RTS; "Z" - December; “2” is the last digit of the year (in this case 2012).

To decipher the short codes of absolutely all trading contracts, the exchange has developed the following explanatory tables.

For example, the code “GDM3” indicates that the gold contract will be settled in June 2013. The code “NKQ4” means that the futures agreement for NOVATEK common shares will be settled in August 2014, etc.

As a rule, the “life” of all Russian futures is three months, which means that futures expire four times a year (usually in mid-March, August, September and December). As the expiration date approaches, trading volumes on the expiring contract begin to decline and gradually move into the next futures expiration date.

During the circulation period, the contract value actually repeats the price dynamics of the underlying asset, but as the expiration date approaches, the price parity can vary significantly. This happens because the majority of trading participants, making mainly speculative transactions, leave this contract without waiting for its execution.

Expiration of RTS index futures

For example, futures on the RTS index are executed 4 times a year, commodity futures on the CME are executed every month.

Expiration dates are set in the specifications of futures contracts.

Thus, the RTS futures specification states:

- “the last Trading day during which a Contract can be concluded (hereinafter referred to as the last day of conclusion of the Contract) is the 15th (fifteenth) day of the month and year of execution of the Contract, and if the 15th (fifteenth) day of the month and year of execution of the Contract is not is a Trading Day - a Trading Day, the date of which follows the 15th (fifteenth) day of the month and year of execution of the Contract”;

- “4.7. For the purpose of determining the Settlement Obligation, the current Settlement Price is considered equal to the average value of the RTS Index for the period from 15:00 to 16:00 Moscow time on the last day of the Contract, determined in accordance with clause 3.4 or 7.2 of the Specification, multiplied by 100 ( one hundred)."

Expiration of options on RTS futures

Currently, options on the derivatives market of the Moscow Exchange expire monthly.

The most critical date for options price changes is the expiration date.

When options expiration coincides with futures expiration, the option price behaves slightly differently on expiration day.

Futures on the derivatives market on such a day “rise” at 16:00 Moscow time, and the settlement price is formed in the interval from 15:00 to 16:00.

The influence of expiration on currency dynamics

Therefore, the time from 15:00 Moscow time to 15:40 Moscow time is critical, during which serious changes in option prices are possible. For example here:

One trader writes that as a result of this sharp movement in the 120 PUT options on September 15, he lost $50 thousand. This happened because the RTS futures began to fall sharply right at the hour of determining the strike price.

Expiration of futures on the S&P500 index

Futures on the S&P500 index are expired, like futures on the RTS index - 4 times a year (March, June, September, December).

Choosing expiration time

Expiration takes place on the 3rd Friday of the expiration month.

Trading of the contract on the expiration day occurs before 08:30 am East Coast time, that is, until 16:30 Moscow time.

Binary options expiration

So, what is binary options expiration? The term “expiration” itself comes from the English. expiration and denotes expiration. In the context of binary options, we mean the moment the trade or option ends. Each transaction, that is, an option, has a certain expiration time - the period from the beginning of the option to its end. When a trader predicts whether the price of an asset will rise or fall, this prediction must only come true during the expiration period of the trade in order to pay out the income.

There are three types of binary options:

One Touch;

Double Touch;

No Touch.

All three types have their own expiration time for binary options. It would seem that everything is simple: the trader selects the asset he wants to trade, selects the type of option, decides how much money he can invest in the transaction and places a bet, and then waits for the expiration time to expire. But there is a nuance here. There is such a thing as extending the expiration date of binary options.

Binary options expiration dates

Expiration dates can be completely different. Mostly from one month or more to just one minute. Naturally, depending on the chosen trading strategy or market conditions, you have the right to purchase some other period that is more suitable for that moment; it is important to understand when and what time is most suitable.

Therefore, when your strategy is long-term, and you are more attracted to the investment type of trading, then, of course, the end of the transaction must be selected appropriate for the situation that you hope for, for example, the completion of the QE program in the United States according to your predictions. As a rule, in such a case, options of one month or more are used.

If you primarily focus on medium-term trading, based on technical analysis and “calculation” of trend movements, then positions lasting 2-3 weeks or about that, perhaps a little less, will be suitable for you, depending on your personal forecasts.

In the case of short-term trading, the best expiration time for a binary option is from several days to 1 week. In this case, as often happens with Forex traders, trades are not left for the weekend, because sometimes, as a result of market closures, rapid changes in the situation occur, which significantly affect the beginning of the instrument’s quotes next week.

In the case of intraday trading, which is often called trading during the day, it would be necessary to select the expiration time of the option from one hour to one trading day, when the saturation of the day decreases and flat movement appears. By looking at the prospects of the day, you can predict how it will end, or, by looking for the chances of outgoing news, you will be able to predict the movement immediately as a result.

Ultra-short trading is described as trading in the middle of one hour or for only a few minutes. In comparison with Forex, it is possible to call such trading pipsing. One of the most alarming types of trading, because you need to take into account rapid short-term fluctuations in quotes and market tinsel.

The trader's choice of options expiration date

What expiration date for a binary option should a novice trader choose? Note that often, in search of easy money and inspired by excitement, traders prefer periods from one to five minutes. Such a strategy very rarely turns out to be correct over a long period of time, because after the winning line there will come exactly the same losing ones as in the game of roulette. As a rule, experienced traders advise using intraday timeframes: these are hourly or daily, that is, those during which it is realistic to expect something specific and not be hostage to the situation of “rollback at the wrong time” and personal emotional experiences.

Another way to correctly select the expiration period is to calculate the number of bars after which you expect a specific market movement, based on technical analysis. Thus, candlestick figures are processed on average in 3-4 candles, trading on a test or rebound from the line - from 4 to 10 bars, depending on the activity of the trend, trend movement needs to be worked out over a longer period - on 10-20 bars of the current period. Knowing this and being guided by technical analysis, at any time it is possible to calculate the correct and suitable expiration period for a binary option.

Regarding fundamental analysis, in its situation, as mentioned earlier, it is necessary to look at the likely effect of the market and its duration. For news messages it is one, for other more important changes it is different.

The expectations of binary options traders regarding the execution of the transaction can help with the choice of expiration. Traders evaluate how quickly they will achieve their goal. In this case, you need to multiply the expected speed (number of candles) by the timeframe. This will be the expiration date for binary options.

Before deciding on the expiration of binary options, determine the deadline for completing the tasks assigned to you. Also take into account your trading style. That is, if it is more convenient for you to conduct long-term trading, then it is not advisable to choose short expiration periods.

Extending the expiration date of binary options

An investor has the opportunity to extend the expiration time of binary options, even after he has already started trading. In such cases, he may use the option to replace the trade with a more distant expiration date to extend the original trade. Very often this benefits the trader. In the case of a losing trade, when we see that the expiration date is approaching and we are losing, we have the right to use the option to extend the trade to delay the expiration of the option and allow the price of the asset to potentially move in the direction in which we predicted earlier, thereby waiting that the deal will be profitable. If a trader is confident that the price of an asset will move in the direction he wants, and the trade is about to end, using this option will help him win.

If the trader is confident that he has correctly researched and analyzed the behavior of the asset, and if his prediction did not come true at the time of expiration, he can apply a binary options expiration extension and add a little more time so that the price of the asset can reach the target. Keep in mind that some brokers charge a fee for using this option. However, the income received in this way, if the trader’s predictions turned out to be correct, compensates for the fee for its use. Such an operation should be carried out carefully and only if the trader is confident that the price of the asset will move in the direction he has indicated, because this can bring both profit and loss, and the loss can be even greater if the predictions do not come true. In other words, it doesn't get rid of losing trades, but simply gives you a chance to reduce them if you predicted the price movement correctly. At the time of the second expiration period, your income will be as follows: the income received minus the loss from the first expiration period. Use this option wisely, only at appropriate times, because your broker will most likely not be very happy with its frequent use.

Also make sure that the broker you like provides this option, since not every brokerage company has it in their list of services.

Early expiration of options

Early expiration occurs when the holder of a call or put option decides to exercise the rights specified in the contract before the expiration date. As a result, the option seller will be obligated to enforce the rights of the option holder, and the shares will change hands, and the outcome will not always be favorable to the option seller. (It is important to note that all talk about early expiration and exercise of options refers to “American style” options.)

Being obligated to buy or sell shares before the time you originally planned to do so greatly increases the potential risk or affects the profitability of the entire position and may even become a unnecessary headache. But there is always a possibility that when selling an option - regardless of whether you are selling a single contract or building a complex strategy - you will encounter early expiration. Many traders mistakenly do not include this possibility in their plans and then have to experience the feeling that their position is literally crumbling before their eyes when an early expiration occurs.

Strategies that can be seriously undermined by early expiration are usually "multi-legged" strategies such as short spreads, butterflies, long calendar spreads or diagonal spreads. The last two strategies in particular can get confused as a result of early expiration due to the fact that you are dealing with multiple expiration dates for the options included in the strategy.

In most cases, early expiration is not a good idea for the option owner. However, there are a few cases where it may be appropriate.

If you sell options, you are constantly at risk of experiencing early expiration. And it is impossible to predict for what reasons the option holder will want to exercise it.

But understanding all the pros and cons can keep you from taking unnecessary risks where early expiration is most likely.

The likelihood that shorted options will expire early depends on whether the options are calls or puts. Let's look at both cases separately.

Reasons not to exercise CALL options early

There are three reasons not to exercise a call early.

Keeping risk limited

When you buy a call, your risk is limited only by the amount you paid for the purchase, even if the stock price drops to zero. But if you own 100 underlying stocks and they crash, you may be left with your hand outstretched.

If your call is in the money before expiration, there is little point in exercising it early. This happens because you can participate in the profits from growth without the risk of participating in losses from the fall of the stock itself. If you exercise your in-the-money call early and buy a stock and it then falls below the strike before the end of the contract's life, you're really screwed. In this case, you could simply let the option evaporate and buy the stock cheaper on the open market.

Safety of money

If you exercise the call early and buy the stock, you will also spend the money early instead of spending it later. You already know how much you plan to pay for the stock because you know the call strike price. So might it be easier to put the money in an interest-bearing deposit for as long as possible before paying for these shares?

Disciplined investors look for every opportunity to get the maximum return from their assets, and those who don't may have a completely empty head.

Option time value

By executing the call early, you may lose money in the form of time value included in the current price of the option. If there is still any time value left in it, the call will always trade above the amount it is “in the money” relative to the strike. So if you want to buy a stock immediately, you can simply sell the call and then use the proceeds to buy the stock. With the addition of any remaining time value, the total price you will pay for the shares will be lower than if you simply exercised the option to exercise the rights contained in it.

Exercising the CALL option early

The only exception to these three rules can be only one situation - when the date for accrual of dividends per share is approaching. Buyers of calls are not recipients of these dividends, so if they still want to receive these dividends, they must expirate their calls “in the money” ahead of schedule and become owners of shares.

If the value of the upcoming dividend payment is greater than the remaining time value in the option price, early expiration may be a wise decision. But you must do it before the ex-dividend date.

Therefore, be wary of dividends if you have shorted a cola - especially when the ex-dividend date happens to be close to the expiration date, the cola is in the money, and the dividend is relatively large.

Risk of early expiration of a PUT option

In the case of puts, the rules change. When the put expires, you sell the stock and receive cash. So it's better to get cash now than to get it later. However, always take the time factor into account in your calculations.

If you own a put and want to sell the stock before the end of the contract's life, it is usually a good idea to sell the put first and then sell the stock immediately afterwards. Thus, you will also take the time value of the put along with the proceeds from shorting the stock.

In any case, as the expiration date of the contract approaches and its time value decreases, there are fewer and fewer barriers to early expiration. By executing a put, you can realize your goals in one simple transaction without any further complications.

If you sell a put, remember that the less time value left in the put price as the end of the contract's life approaches, the more likely you are to face early expiration risk. So keep an eye on the time value of your short put and have a plan in case the buyer exercises the contract early.

In contrast to calls, the approaching ex-dividend date may be a barrier to early exercise of puts. By exercising the put, the owner receives the money now. At the same time, a short position in the stock is created if the put holder did not have one to begin with. Therefore, the expiration of a put on the day before the ex-dividend date means that the holder of the put will be obligated to pay the dividend.

So if you sell a put, you are unlikely to be subject to early exercise, at least until dividends accrue on the underlying stock.

Early expiration of short options

Early expiration of short options in multi-legged strategies can really trip you up. If this happens, there is no quick and unambiguous answer to the question “what to do.” Sometimes you will be inclined to exercise a long option, sometimes you will be inclined to close the entire position. But it's always a good idea to keep a small stash of petty cash close to your computer. Just in case.

Option Exercise Styles

When it comes to option exercise, there are two “styles” - American and European. But don't be fooled by the names - it's not about where these options are traded. In fact, both styles are traded on US exchanges. The difference is when these two types of options can be exercised.

American style options expiration

American style options can be expired by the holder at any time prior to expiration. Thus, the seller may face obligations arising from exercising the option at any time during the life of the contract. European style options

Before you create a position, it is vital to know what style of options you are going to include in it. This way you will know whether you may experience early expiration of your contracts.

Choosing the expiration date

And just keep in mind that, regardless of the option style, all of them can be bought or sold on the open market to close out the position at any time during the life of the contract.

The influence of expiration on the course of trading

When trading on the stock or commodity market, do not forget about the “witching hour”, when trading on the market is quite risky. Once a quarter - on the third Friday of March, June, September and December - options and futures on indices and stocks expire simultaneously. This Friday is called the “triple witching day”, or Triple Witching (expiration of 3 types of contracts: index futures, index options, stock options), or “quadruple witching” Quadruple Witching (single stock futures (SSF) are added to the mentioned contracts) .

This event is fraught with illogical and sharp movements in quotes, as players chaotically close positions, as a result of which trading volumes and the volatility of a crazy market can increase by one and a half to two times. In this case, both the fundamental and technical picture of the market are often ignored, and in the event of a “lull” in the news background and the absence of a clear trend, it is almost impossible to predict jumps.

In addition, the risk that the “enchanted” market will present “surprises” remains throughout the week until expiration.

The sharp drop in the S&P index on December 21: “Four Witches Friday” led to a sharp drop in the index by 50 points, then it recovered by about 30 points.

If the stock market sees strong buying of PUT options relative to buying of CALL options 1-2 weeks before expiration, then we can expect an upward shift during the expiration week. The bearish position of options traders causes prices to rise. However, in the case of the opposite situation, strong purchases of CALL options, the upward movement may be weakened or completely absent.

Card expiration date

The term expiration in medicine

Expiration is removing air from the lungs during breathing: exhalation of air.

Exhalation (expiration) occurs as a result of relaxation of the respiratory muscles, as well as due to the elastic traction of the lungs trying to take their original position. The elastic forces of the lungs are represented by the tissue component and surface tension forces, which tend to reduce the alveolar spherical surface to a minimum. However, the alveoli normally never collapse.

Sources and links

Sources of texts, pictures and videos

wikipedia.org - free encyclopedia Wikipedia

dic.academic.ru - dictionaries and encyclopedias on the Akademik portal

bibliotekar.ru - online electronic library Librarian

youtube.com - video hosting for videos on various topics

studopedia.org - online encyclopedia for students Studopedia

wikiznanie.ru - online electronic encyclopedia Wikiknowledge

bibliofond.ru - online electronic library Bibliofond

grandars.ru - electronic economic encyclopedia Grandars

vedomosti.ru - Vedomosti information and news portal

stock-list.ru - site about trading in financial markets

smart-lab.ru - information and analytical site for traders

forex-traider.ru - site about trading on the Forex currency market

daida.ru - investor notes on investments in PAMM accounts

aboutoptions.ru - information site about options for traders

chiefbinaryoptions.com - site about binary options trading

guruinvest.com - website about finance and investing

classes.ru - collection of explanatory online dictionaries

optionsworld.ru - information site about options

binaryoptionsportal.ru - portal about binary options trading

9pips.com - online community of stock traders

promo-broker.ru - site about finance and stock trading

portalinfo.org - portal about Russian business abroad

fortrader.ru - website about trading in financial markets

gipocrat.ru - informational and educational website about medicine

ownforex.ru - analytical site about forex trading

forexblog-pamm.ru - site about trading and investing in the Forex market

blog.ru.hymarkets.com - blog about the international foreign exchange market

biznesclubnet.ru - site about business and making money

medlecture.ru - informational and educational website about medicine

Links to Internet services

forexaw.com - information and analytical portal on financial markets

google.ru - the largest search engine in the world

video.google.com - search for videos on the Internet using Google

translate.google.ru - translator from the Google search engine

yandex.ru - the largest search engine in Russia

wordstat.yandex.ru - a service from Yandex that allows you to analyze search queries

video.yandex.ru - search for videos on the Internet via Yandex

images.yandex.ru - image search through the Yandex service

otvet.mail.ru - question answering service

slovari.yandex.ua - dictionary service on Yandex

Application links

windows.microsoft.com - website of Microsoft Corporation, which created the Windows OS

office.microsoft.com - website of the corporation that created Microsoft Office

chrome.google.ru - a frequently used browser for working with websites

hyperionics.com - website of the creators of the HyperSnap screenshot program

getpaint.net - free software for working with images

etxt.ru - website of the creators of the eTXT Antiplagiarism program

Article creator

vk.com/panyt2008 - VKontakte profile

odnoklassniki.ru/profile513850852201- profile in Odnoklassniki

facebook.com/profile.php?id=1849770813- Facebook profile

twitter.com/Kollega7 - Twitter profile

plus.google.com/u/0/ - profile on Google+

livejournal.com/profile?userid=72084588&t=I - blog on LiveJournal