# Expiration > Expiration is the date a derivative contract ends. Learn what happens to futures, options and prediction markets at expiry, and how traders manage it. Source: https://learn.tradelabsai.com/markets/expiration/ Track: Markets and Instruments · Level: Beginner · Updated: 2026-10-03 Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice. Cite as: TradeLabs Learn, "Expiration", https://learn.tradelabsai.com/markets/expiration/ Many financial contracts have an end date. Futures, options, forwards and prediction markets all expire: on a set day, the contract stops trading and is settled, either by delivering the underlying asset or by paying cash. Shares and spot currencies do not expire, which is one of the biggest practical differences between owning an asset and holding a derivative on it. ## What happens at expiration | Instrument | At expiration | |---|---| | Futures | Closed and settled in cash, or the asset is delivered, depending on the contract | | Options | Either exercised, assigned or expire worthless | | Prediction market shares | The outcome is resolved; winning shares pay $1, losing shares pay $0 | | Crypto perpetual futures | Never expire; kept near spot by funding payments instead | ## Futures expiration Futures are listed for specific months, such as March, June, September and December for stock indexes. Each contract has a **last trading day**, and physically settled contracts also have a **first notice day**, after which holders of long positions can be assigned delivery. See [Contract Months and Expiration](https://learn.tradelabsai.com/futures/contract-months-and-expiration/) and [First Notice Day and Last Trading Day](https://learn.tradelabsai.com/futures/first-notice-day/). Most traders never reach expiry. They close their position or **roll** it into the next contract month before the deadline. Volume shifts from the expiring contract to the next one in the days before, so liquidity follows the roll. See [Rollover](https://learn.tradelabsai.com/markets/rollover/) and [Rolling Futures Contracts](https://learn.tradelabsai.com/futures/rolling-futures-contracts/). ## Options expiration Each option has an expiration date. At expiry: - An option that is **in the money**, meaning it has intrinsic value, is usually exercised. Under the US clearing system's standard procedure, equity options in the money by at least $0.01 at expiration are exercised automatically unless the holder instructs otherwise. - An option that is **out of the money** expires worthless. - Sellers of in the money options are **assigned** and must buy or sell the underlying shares. **Example: An option at expiry** You hold a $100 call on a stock that closes at $104 on expiration day. The call is $4 in the money, so it is exercised automatically: you buy 100 shares at $100, worth $400 more than you paid. If you did not have $10,000 in your account to pay for the shares, your broker may sell the option before expiry or close the resulting position. Many traders sell options before expiry instead of letting them exercise. US stock options traditionally expire on the third Friday of the month, but weekly options and, for some indexes and ETFs, daily expiries now exist. See [Option Expiration Dates](https://learn.tradelabsai.com/options/option-expiration-dates/). ## Time decay into expiration An option's time value shrinks as expiration approaches, and the decay speeds up in the final weeks. Buyers of options fight this decay; sellers benefit from it. See [Theta](https://learn.tradelabsai.com/options/theta/). ## Expiration effects on prices Large expirations can affect the underlying market: - **Pinning:** stocks sometimes gravitate towards strike prices with large open interest near expiry, as dealers adjust hedges. - **Volatility around expiry:** hedging flows can increase or dampen moves in the final hours. - **Quarterly expirations:** when stock index futures, index options and stock options expire on the same day each quarter, volume spikes. This is often called [Options Expiration and Triple Witching](https://learn.tradelabsai.com/macro/triple-witching/). ## Prediction market expiration Prediction markets expire when their question is answered. Short crypto rounds, such as Polymarket's 5 and 15 minute Bitcoin up or down markets, expire every few minutes on a fixed schedule, with the outcome decided by comparing the final price with the round's starting price. See [Up or Down Markets Explained](https://learn.tradelabsai.com/prediction-markets/up-or-down-markets-explained/) and [Price to Beat and How Rounds Settle](https://learn.tradelabsai.com/prediction-markets/price-to-beat/). ## Managing expiration 1. **Know the dates** for every contract you hold, including last trading day and any notice dates. 2. **Decide in advance** whether you will close, roll or let a position expire. 3. **Check your broker's rules** on automatic exercise, early closing and delivery. 4. **Have enough cash** if an option may be exercised or assigned. 5. **Avoid surprise assignment** on short options near expiry, especially around dividends. ## Frequently asked questions ### What happens if I hold an option until expiration? If it is in the money, it is usually exercised automatically, giving you shares or a cash payment. If it is out of the money, it expires worthless. ### Do stocks expire? No. Shares have no expiration date. Only contracts such as options, futures and prediction market shares expire. ### What happens to futures at expiration? They stop trading and settle in cash or by delivery of the underlying asset. Most traders close or roll positions before that happens. ## Sources - Wikipedia, [Expiration (options)](https://en.wikipedia.org/wiki/Expiration_%28options%29) - U.S. Securities and Exchange Commission, [Options](https://www.investor.gov/introduction-investing/investing-basics/glossary/options) ## Continue learning - Next lesson: [Rollover](https://learn.tradelabsai.com/markets/rollover/) - Previous lesson: [Settlement](https://learn.tradelabsai.com/markets/settlement/) - Related: [Settlement](https://learn.tradelabsai.com/markets/settlement/): Settlement is when cash and securities actually change hands after a trade. Learn settlement cycles like T+1, cash vs physical settlement and how it affects you. - Related: [Option Expiration Dates](https://learn.tradelabsai.com/options/option-expiration-dates/): Every option has an expiration date when it must be used or expire. Learn monthly, weekly and 0DTE cycles, what happens at expiry and how to choose an expiration. - Related: [Contract Months and Expiration](https://learn.tradelabsai.com/futures/contract-months-and-expiration/): Futures trade in specific contract months with letter codes and fixed expiry rules. Learn month codes, the front month, quarterly cycles and how expiry works. - Related: [Rollover](https://learn.tradelabsai.com/markets/rollover/): Rollover means moving a position into a later contract, or carrying a forex trade overnight. Learn how futures rolls and forex swaps work and what they cost. - Related: [Options Expiration and Triple Witching](https://learn.tradelabsai.com/macro/triple-witching/): Triple witching is when stock options, index options and index futures expire together. Learn when it happens, why volume spikes and how traders prepare.