The AI (ChatGPT) Stock Investing Handbook: Options - Expiration Date

Here is the response from ChatGPT for the prompt options expiration date entered on February 15, 2023

The options expiration date is the date on which an options contract expires and ceases to be valid. After this date, the option holder loses the right to exercise the option and the option contract becomes worthless. The expiration date is one of the key features of an options contract, and it is set at the time the option is created.

For equity options, the expiration date is typically the third Friday of the expiration month. For example, if an option contract expires in May, the expiration date would be the third Friday of May. However, there are also options with weekly or monthly expiration dates, which can have different expiration days and times.

It is important to note that the expiration date is not the same as the last day to trade an option. In the United States, equity options typically stop trading at 4:00 pm Eastern Time on the day before the expiration date, but this can vary depending on the specific exchange and the type of option.

Traders and investors who hold options positions should be aware of the expiration date and plan their trading strategies accordingly. They can either choose to exercise the option before it expires, sell the option before it expires, or allow it to expire worthless. It is important to keep in mind that options trading involves a high degree of risk, and traders should fully understand the potential risks and rewards of options trading before engaging in it.

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