All options have expiration dates and these expire on their respective expiry dates. The exact date of expiration is fixed within each month. The last trading day for “regular”, also called monthly, option is the third Friday in the expiration month. However, options expire on Saturday.
There are quarterly options that expire on the last trading of March, June, September and December.
There are also weekly options. These are listed on a Thursday and expire on the Friday that occurs eight calendar days later. The weekly options expire on Friday and not on Saturday as regular options do. For list of weekly Options you can visit Options Clearing Corporation Website.
Option cycles are expiration dates that apply to the different series of options. The option cycle apply to stock and index options as well as commodity, currency and debt instrument options.
There are three common option cycles. These are either for January or February or March cycle
In January cycle options expire on the following months: January, April, July and October
In the February cycle options expire on the following months:
February, May, August and November
In the March cycle options expire on the following months:
March, June, September and December
In addition to the above monthly cycles, stock and index options also expire in the current month and the subsequent month which is next month. The options for current and subsequent month is provided so that short-term traders can trade options for speculation or hedging purposes.
Therefore, in any cycle, options may expire in 3 of the 4 major months plus the near-term month and subsequent month.
Two Examples of Options Expiration Cycles
For example, let’s say today is February 1st. Therefore, options will be listed for the month of February (current month) and also for the month of March (subsequent month) and will also be listed for the months of April, July and October.
Let’s say today is June 1st. Therefore, options will be listed for the month of June (current month) and July (subsequent month) and will also be listed for the month of September and December.
If a trader is looking at option chains in his broker platform and notices that options are listed for the month of June and July then he would not know for what cycle the options are listed. He also has to see the months listed beyond the month of July. And if he sees options are listed for the month of September and December then he knows that options are listed for the March cycle.
If there were LEAPS options on the stock, then these would expire in January of the following year and in January of the year after that.
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