What it is
Options expiration refers to the predefined date on which an options contract, whether a call or a put, reaches the end of its life. On this date, the holder of the option must decide whether to exercise it, assuming it's in-the-money, or let it expire worthless. Most options contracts expire on the third Friday of each month, but weekly and even daily options are also common.
Options expiration can significantly impact stock prices, especially for companies with high open interest in expiring contracts. Market makers, who facilitate options trading, often need to buy or sell the underlying stock to hedge their positions as options approach expiration. This hedging activity, known as "gamma hedging," can create amplified price movements in the underlying stock, particularly on expiration Fridays.
Why it matters
Options expiration can lead to increased volatility and price swings in underlying stocks due to market maker hedging activity, impacting your portfolio.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice