Option Expiration Calendars: A Guide for Traders

Options trading is a complex but potentially rewarding aspect of the financial markets. One crucial element that every options trader must understand is the concept of option expiration. To help traders navigate this important aspect, let’s delve into Option Expiration Calendars and their significance.

What is Option Expiration?

Option expiration is the last trading day on which an options contract can be exercised. When an option expires, there’s no further trading activity on that contract. All options contracts have a predetermined expiration date, and understanding these dates is crucial for effective options trading.

The Importance of Expiration Dates

On the expiration date, all in-the-money (ITM) options are automatically exercised. If you own an options contract that has reached its expiration date and has intrinsic value, it will be exercised whether you want it to or not. Therefore, if you don’t wish for your positions to be exercised at expiration, you must exit them before the market closes on the expiration day.

There are two possible outcomes when an option expires:

1. In-the-money (ITM) options are exercised automatically.
2. Out-of-the-money options expire worthless.

When Do Options Typically Expire?

Monthly options contracts usually expire on the third Friday of every month. However, many highly traded stocks and ETFs now offer weekly – and in some cases, daily – expirations. It’s important to note that while the stock market closes at 4 pm EST, options can be exercised until 4:30 pm EST on the day of expiration.

Option Expiration Calendar 2024

Here are the monthly option expiration dates for 2024:

• January 19, 2024
• February 16, 2024
• March 15, 2024
• April 19, 2024
• May 17, 2024
• June 21, 2024
• July 19, 2024
• August 16, 2024
• September 20, 2024
• October 18, 2024
• November 15, 2024
• December 20, 2024

Note that there are no irregular monthly expirations in 2024 (all are Fridays). However, there is one irregular weekly expiration on March 28, 2024 (Thursday), due to the Good Friday holiday on March 29, 2024.

Option Value at Expiration

When an option expires, its value is derived from the underlying asset’s price. In-the-money options will have intrinsic value, which is the amount the option would be worth if exercised immediately. Out-of-the-money options have no intrinsic or extrinsic value at expiration because there’s no time value remaining.

Why Option Expiration Calendars Matter

Understanding option expiration calendars is crucial for several reasons:

1. Risk Management: Knowing when your options expire helps you manage your risk and plan your trades accordingly.
2. Strategic Planning: Expiration dates can influence your trading strategy, especially when considering rolling options or closing positions.
3. Avoiding Surprises: Being aware of expiration dates helps you avoid unexpected outcomes, such as automatic exercise of ITM options.
4. Capitalizing on Opportunities: Some traders use expiration dates to their advantage, such as writing options that expire quickly to benefit from time decay.

Using ExpirationNext and StrikeNext Functions in MarketXLS: A Quick Guide

ExpirationNext Function:

• Returns the next expiration date for options of a given symbol
• Syntax: =ExpirationNext(Symbol, Index)
• Example: =ExpirationNext(“MSFT”, 1) returns the next expiration date for Microsoft options

StrikeNext Function:

• Returns the next strike price for options of a given symbol near the money
• Syntax: =StrikeNext(Symbol, Position, [Expiration])
• Example: =StrikeNext(“MSFT”, 1) returns the first above-the-money strike price for Microsoft options

Note: Prefix “=mxls.” for Excel Online and Excel on MAC. For support, contact support@marketxls.com.

Conclusion

Option Expiration Calendars are essential tools for options traders. By understanding and utilizing these calendars, traders can make more informed decisions, manage their risks more effectively, and potentially increase their chances of successful trading outcomes. Always remember to consult the most up-to-date expiration calendars and consider how expiration dates factor into your overall trading strategy.