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Expiration Date

In options trading, an Expiration Date refers to the last date that an options contract is valid. On this date, the contract will expire and cease to exist. The holder of the contract has the right to exercise the option at any point before its expiration date. However, if the option is not exercised before this date, it becomes worthless and the holder no longer has any of the rights inherent in that contract.

In simple terms, if you have an option, you can use it to buy or sell the underlying asset at a pre-agreed price, but only until the expiration date. After that, your rights to this particular deal are over, whether you have made a profit or not. The expiration date is one of the key terms involved in an options contract, and it’s part of what defines its value.

Remember, all options are wasting assets, which means that their value decreases over time as they get closer to the expiration date. This continuous decrease in their value is called time decay or theta. Understanding how options’ expiration dates work is crucial to your success as an options trader.

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