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In finance, the expiration date of an option contract (represented by Greek letter tau, τ) is the last date on which the holder of the option may exercise it according to its terms. [1] In the case of options with "automatic exercise", the net value of the option is credited to the long and debited to the short position holders.
An upcoming U.S. stock options expiration that is set to be the largest on record is tamping down market swings, potentially counterbalancing any gyrations stirred by the Federal Reserve's ...
Instead, options have to be actively managed, and because they eventually expire, they need a trader’s careful attention, or a small fortune in options may end up worthless.
All the options have the same expiration and the strikes are equally distant from one another. The strategy maxes out its profit if the stock closes expiration right at the middle strike price.
A European option may be exercised only at the expiration date of the option, i.e. at a single pre-defined point in time. An American option on the other hand may be exercised at any time before the expiration date. For both, the payoff—when it occurs—is given by {(),}, for a call option
When an option is exercised, the cost to the option holder is the strike price of the asset acquired plus the premium, if any, paid to the issuer. If the option's expiration date passes without the option being exercised, the option expires, and the holder forfeits the premium paid to the issuer.
Expiration: When the option expires and is settled. One option is called a contract, and each contract represents 100 shares of the underlying stock. Exchanges quote options prices in terms of the ...
In most cases, options should not be exercised before expiration because doing so gives away inherent value. Selling them would almost invariably yield more. For an American-style call option, early exercise is a possibility whenever the benefits of being long the underlier outweigh the cost of surrendering the option early.
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