> ## Content Index > Fetch the complete content index at: https://www.constellationstocks.com/llms.txt > Use this file to discover other available public pages before exploring further. # What Happens When an Option Expires? Four Cases, With Real Examples - URL: https://www.constellationstocks.com/blog/what-happens-when-an-option-expires/ - Published: 2026-10-15T20:13:06.000Z - Updated: 2026-10-20T17:12:00.000Z - Description: Out of the money, an option expires worthless. In the money by $0.01, it turns into 100 shares. The four cases, the expiration day timeline, and three real trades. - Author: Iskan Rakhmatov - Tags: Options, Beginners When an option expires, one of two things happens. If it is out of the money, it expires worthless: the buyer loses the premium and the seller keeps it. If it is in the money by $0.01 or more, it is usually exercised automatically: the call or put turns into 100 shares bought or sold at the strike. If you do not want either outcome, close the position before expiration day ends. *New to options? Start with* [*Options Trading for Beginners: The Complete Guide*](https://www.constellationstocks.com/blog/options-trading-for-beginners/)*.* ## Key takeaways - **Out of the money at expiry:** the option disappears. The buyer's loss is the premium paid; the seller keeps the premium. - **In the money by $0.01 or more:** automatic exercise. A long call buys 100 shares at the strike, a long put sells 100 shares. The seller on the other side is assigned. - **Timing:** standard stock options stop trading at 4:00 pm ET on expiration day. Holders can still give exercise instructions until about 5:30 pm ET, so a short option can be assigned on an after-hours move. - **Most traders close before expiry.** It avoids surprise assignments, overnight stock risk, and the need for cash to take the shares. ## The four cases at expiration | Your position | Expires out of the money | Expires in the money | | ------------- | ---------------------------------------- | --------------------------------------------------------------------------------------- | | Long call | Expires worthless. You lose the premium. | Exercised: you buy 100 shares at the strike. | | Long put | Expires worthless. You lose the premium. | Exercised: you sell 100 shares at the strike (a short position if you do not own them). | | Short call | You keep the full premium. | Assigned: you sell 100 shares at the strike (a short position if you do not own them). | | Short put | You keep the full premium. | Assigned: you buy 100 shares at the strike. | A call is in the money when the stock is above the strike. A put is in the money when the stock is below the strike. ## What happens on expiration day, step by step Times are Eastern for standard monthly stock options, which expire on the third Friday of the month. 1. **4:00 pm: trading stops.** You can no longer buy or sell the expiring option. Some brokers stop you earlier. 2. **4:00 to about 5:30 pm: the exercise window.** Options in the money by $0.01 or more at the close are set to be exercised automatically. Holders can still ask to exercise, or not to exercise, until the deadline. If the stock moves after the close, an option that closed out of the money can still be exercised. 3. **Overnight: the clearing house matches exercises with sellers.** Your broker then picks which of its clients with short positions are assigned, by a random or first-in-first-out method. 4. **Next business day: shares appear in the account.** Your option position is replaced by 100 shares, long or short, per contract. The after-hours window is the risk most beginners do not see. A short put that closed $0.20 out of the money can still be assigned if bad news drops at 4:30 pm. ## Three real examples from my account ### 1\. Long puts that expired worthless On September 18, 2026, I held 30 Fastly (FSLY) $17.50 puts. I had paid about $2.23 per share for them, betting the stock would fall. It did not, the puts finished out of the money, and they expired worthless. I lost the full premium. Nothing else happened: no shares, no assignment. This is the most common way a long option ends badly. ### 2\. A short put I closed early In September I had a put spread on Old Dominion Freight (ODFL), with a short $190 put expiring September 18\. On September 1, 17 days before expiry, I bought the short put back for $2.50 instead of holding it to the end. Closing early removed the chance of being assigned 400 shares at $190 on expiration day. ### 3\. A short put I plan to hold to expiry As part of my wheel strategy experiment, I am short one TTWO $180 put expiring December 18, 2026\. If TTWO closes above $180 that day, the put expires and I keep the $647 premium. If it closes below $180, I will be assigned 100 shares at $180, with a real cost of $173.53 after the premium. I set aside $18,000 in cash for that case. The full plan is in [The Wheel Strategy for Options, Tested With Real Money](https://www.constellationstocks.com/blog/wheel-strategy-for-options/). ## What if you cannot afford the shares? If a long call is in the money at expiry, exercise means paying the strike times 100 for every contract. If your account cannot cover it, many brokers close the position for you before the close, or exercise it and issue a margin call. Policies differ, so check yours. The safe habit is to sell an in-the-money option before expiration day ends, unless you want the shares. ## Spreads at expiration A spread has two legs, and they expire separately. If the stock finishes between the two strikes, one leg is exercised and the other expires worthless. You wake up holding 100 shares per contract that you never meant to own. This is called pin risk. Close spreads before expiry when the stock is near either strike. ## Index options are different Options on indexes such as SPX are settled in cash, not shares. If they finish in the money, you receive or pay the difference in cash. Some index options are AM-settled: they stop trading the day before, and the settlement price is set from opening prices on expiration morning. ## FAQ ### Do you lose money if an option expires? If you bought it and it expires out of the money, yes: you lose the full premium. If you sold it and it expires out of the money, you keep the premium, and that is your profit. ### What time do options expire? Standard stock options stop trading at 4:00 pm ET on expiration day. The deadline to give exercise instructions is about 5:30 pm ET. Some brokers set earlier cutoffs. ### What happens if I don't sell my option before expiration? If it is out of the money, it expires worthless. If it is in the money by $0.01 or more, it is usually exercised automatically, and you end up with 100 shares, long or short, per contract. ### Can you trade options on expiration day? Yes, until 4:00 pm ET for standard stock options. Prices move fast on the last day, because little time value is left. --- If you want to see how exits are planned as part of the Method, [book a free walkthrough of the Method](https://www.constellationstocks.com/consultation/). *This post is educational and is not investment advice. Options involve substantial risk and are not suitable for every investor.*