Options Expiry

Knowing what will happen to your option, at expiry, is an important part of options trading that you need to understand.

If your option expires out of the money i.e. no intrinsic value, then nothing happens and your options just expire and disappears BUT if your option expires in the money, it will have intrinsic value. This means that on the expiry day (NB – AFTER THE CLOSE OF TRADING on that day), that the following will happen:

1. If you are LONG a CALL – you will receive a LONG FUTURES at the Strike Price.

2. If you are SHORT a CALL – you will receive a SHORT FUTURES at the Strike Price.

3. If you are LONG a PUT – you will receive a SHORT FUTURES at the Strike Price.

4. If you are SHORT a PUT – you will receive a LONG FUTURES at the Strike Price.

Please take note that the above scenarios will happen AFTER THE CLOSE OF TRADING!! If that close was on a Friday, then the first possibility for you to do something with your newfound position will only be on the next Monday, when the market opens again. Strange things can happen over a weekend!


The situation described above can be potentially dangerous, so consider avoiding it by doing the following:

Get out of the option before this happens and just sell it onto someone else, or buy the option back if you are short the option. Unless of course, the option is far out of the money or deep in the money, but still be careful in these cases!

If you are unable to do the above, offset your position with an opposite position in the futures market to cancel out the position you will receive!

Don’t take chances – get out before you get into this situation!