What do you mean the option expires? Option itself refers to buying or selling a right, in other words, buying a right and selling an obligation.
This allows the option seller to buy or sell related futures contracts when the buyer exercises the option to fulfill his obligations, and has a certain time to trade futures contracts in the futures market to hedge the liquidation, so that the option seller has the opportunity to avoid the situation that he may be unwilling or not prepared to make due delivery.
The expiration date of the option contract refers to the latest date that the option contract must be performed. The expiration date of a contract is usually sometime one month before the delivery date of the relevant futures contract.
When does the option expire? The expiration date of the option refers to the last day stipulated in the option contract, that is, the effective period of the option contract. Upon expiration, the option contract will be invalid and the holder will no longer be able to exercise the rights stipulated in the option contract. The expiration date of the option is a very important date in the option contract, which determines the term and duration of the option contract.
What will the option do when it expires? After the option expires, if we don't close the position, then it will be exercised automatically and the exchange will help us trade. Generally speaking, options can still be traded on the maturity date, but trading options on the maturity date is risky. Among European options, when the option expires, the time value of the option consumes the fastest. At this time, if there is no big fluctuation in the theme, we can only watch the value of the option return to zero.
Option trading skills It is also very important to understand the risks and potential benefits of option trading. Option trading can provide a high leverage effect, that is, you can get more benefits with less capital investment. However, it also means higher risks. Traders should carefully assess their risk tolerance and use appropriate risk management strategies.
It should be noted that no matter how carefully short options are sold, it is impossible to guarantee 100% profit. Therefore, while shorting options, we should also design risk management methods in advance, such as moving positions. Only in this way can we get ready and further improve the trading performance.