Monthly Options Expiration

What options expiration is

An option is a contract that gives its holder the right, but not the obligation, to buy (a call) or sell (a put) an asset at a set price, the strike price, on or before a set date, the expiration date. When that date arrives, every open contract in that series must be either exercised or allowed to expire worthless.

U.S. listed options now expire on many days, including weekly and even daily expirations on the most active products. But the standard monthly expiration, often shortened to OpEx, remains a focal point, because it is when the largest concentration of open contracts on individual stocks, exchange-traded funds and indexes typically comes due.

When it happens

Standard monthly options expire on the third Friday of the month. The rule is mechanical, which is why dates on this page are labelled as computed rather than read from a publisher’s schedule.

When the exchange is closed on that Friday, most commonly because of the Good Friday holiday, expiration moves to the preceding business day, usually Thursday.

In March, June, September and December, the monthly expiration coincides with the expiration of quarterly stock index futures and options, an event known as quad witching.

AM versus PM settlement

How an option settles depends on the product.

• Stock and ETF options stop trading at the close on expiration day. Contracts that are in the money are generally exercised, and shares change hands.
• Standard monthly S&P 500 index options (SPX) are AM-settled. They stop trading the day before, and their final value is based on a special opening quotation calculated from the opening prices of the index’s component stocks on the morning of expiration. The calculation waits until every component has opened. This is why the settlement value can differ noticeably from where the index closed the night before.
• Weekly and other PM-settled index options (such as SPXW) settle based on closing prices on the expiration date.

Index options are cash-settled: no shares change hands; the difference is paid in cash. Product rules are set out in the exchange’s contract specifications, such as Cboe’s S&P 500 index options specifications.

How expiration is said to affect markets

Several effects are commonly attributed to monthly expiration. They are plausible mechanisms, not reliable patterns.

Hedging flows

Market makers who sell options typically hedge by trading the underlying stock or futures. As expiration approaches and those options lapse, the hedges are unwound or rolled to later dates. Some traders argue this can change how the market behaves in the days around expiration, but the size and direction of the effect vary from month to month.

“Pinning”

A stock with a large amount of open interest at one strike price is sometimes said to be “pinned” near that strike as expiration approaches, because of hedging activity on both sides. The idea is popular; whether it happens in any given case is far from certain.

Volume and volatility

Trading volume is often elevated on expiration days, particularly around the close as positions are settled and rolled. Price volatility is a different matter: an expiration day can be calm or turbulent, and the reason is usually the news, not the calendar.

Exercise and assignment basics

• An option holder who exercises a call buys the shares at the strike price; a put holder sells them.
• The option seller on the other side is assigned and must fulfil the contract.
• In-the-money stock options are typically exercised automatically at expiration unless the holder instructs otherwise, which can leave inexperienced traders holding unexpected share positions on Monday morning. Brokers’ rules and deadlines vary, so the details belong in the broker’s documentation.

Common misreadings

• Assuming expiration moves the market in a predictable direction. There is no dependable directional effect.
• Confusing monthly expiration with the end of the month. Standard monthly options expire on the third Friday, not the last trading day.
• Forgetting AM settlement. Holders of standard SPX options can be surprised by a settlement value set at Friday’s open.

Frequently asked questions

When do monthly options expire?

On the third Friday of the month. If the exchange is closed that day, expiration moves to the preceding business day.

What is OpEx?

Short for options expiration, usually meaning the standard monthly expiration on the third Friday.

What does AM-settled mean?

That the option’s final value is based on opening prices on the expiration date rather than closing prices. Standard monthly SPX options are AM-settled.

Does options expiration make the market more volatile?

Trading volume is often higher, but there is no reliable evidence that expiration days are consistently more volatile or move in a particular direction.

Explainer updated November 13, 2026.