What Is Expiration in Futures and Options? Simple Explanation
Futures and options have a limited lifespan. The date a contract expires is called expiration. Here's what happens to your position on that day.
What it is
Expiration is the date when a derivative contract (a futures contract or an option) expires and is settled. After that, the contract no longer exists.
What happens to your position
| Contract | At expiration |
|---|---|
| Cash-settled futures | The difference is paid in cash |
| Physically settled futures | The asset itself is delivered |
| In-the-money option | Exercised, or the difference is paid out |
| Out-of-the-money option | Expires worthless |
Many brokers close retail clients' positions in advance to avoid delivery. Check your broker's terms.
What you need to know
- If you want to hold a position longer, you “roll” it into the next contract.
- On days of large expirations, the market can be choppy.
- Perpetual crypto futures have no expiration — instead there's the funding rate.
More in the futures lesson.
Aspiro Trade — signals on 45 assets, each with an entry, take-profit and stop-loss included. First month free.
- Expiration is the date a contract expires.
- A cash-settled contract closes in money, a physically settled one in the asset.
- An out-of-the-money option expires worthless.
Frequently asked questions
How do I find the expiration date?
It's listed in the contract specifications and is often encoded in the contract's name. The exchange publishes an expiration calendar.
What happens if I don't close a futures contract before expiration?
A cash-settled one closes at the final price. With a physically settled one, you may receive the asset, but brokers often close the position themselves in advance.
Do stocks have an expiration?
No. You can hold a stock as long as you like; only derivative contracts expire.
Free Aspiro Academy
26 lessons on investing and trading from scratch: videos, practice in the Aspiro apps, quizzes and a certificate. Lesson texts are open without sign-up.