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Expiration

• The time when the option contract ceases to exist (expires).

• Is the date stipulated for the cessation of the life of an option. It is also the formal acknowledgment of the option s termination.

 
 

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 Embedded terms in definition
 Contract
Option
Time
 
 Referenced Terms
 American option: An option that may be exercised at any time up to and including the Expiration date. Related: European optionAn option that may be exercised at any time during the life of the option. Stock options that trade in U.S. option exchanges, such as the CBOE, are of American types. Index options are of either American (option on S&P100 index, called OEX) or European types (option on S&P500 index, called SPX). See call and put options.

 American style option: Is an option which permits exercise prior to the indicated Expiration date. This compares to an European Style option which can only be exercised on the expiration date.An option contract that can be exercised at any time between the date of purchase and the Expiration date. Most exchange-traded options are American style.

 American style option: Is an option which permits exercise prior to the indicated Expiration date. This compares to an European Style option which can only be exercised on the expiration date.An option contract that can be exercised at any time between the date of purchase and the Expiration date. Most exchange-traded options are American style.

 Back contracts: Futures contracts farthest from Expiration.

 Basket options: Packages that involve the exchange of more than two currencies against a base currency at Expiration. The basket option buyer purchases the right, but not the obligation, to receive designated currencies in exchange for a base currency, either at the prevailing spot market rate or at a prearranged rate of exchange. A basket option is generally used by multinational corporations with multicurrency cash flows since it is generally cheaper to buy an option on a basket of currencies than to buy individual options on each of the currencies that make up the basket.

 
 Related Terms
 Expiration cycle
Expiration date
Time until expiration

<< Expenses Expiration cycle >>

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