In options trading, the term expiration date refers to the date on which an option expires. Upon expiry, an option which is in the money is either automatically exercised or exercised at the discretion of a broker – depending on its terms and conditions. Options which are out of the money when they reach their expiration date simply expire without being exercised.
The expiration date is one of the most important factors in options trading because it denotes the time frame which determines the outcome of the option. Gains or losses are determined by the rates of the underlying assets on the expiration date.
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