Lesson 8 of 8 · 2 min
Expiration
Monthly, weekly and same-day expiries, settlement, and why positioning resets.
Expiry cycles
S&P 500 options now expire every trading day, alongside the traditional monthly expiration on the third Friday and quarterly expirations that coincide with futures. Same-day options are often called 0DTE.
Settlement
- Some index options settle to an opening price (AM-settled), others to the closing price (PM-settled).
- Options on futures settle into futures positions or cash depending on the contract.
Why expiry matters
- Gamma rises as near-the-money options approach expiry, so hedging adjustments can grow.
- After expiration, the hedges tied to expired options are no longer needed, and positioning resets.
- Large quarterly expirations can coincide with index rebalancing and higher volume.
Key Insight
"Pinning" toward big strikes near expiry is sometimes discussed, but it's a tendency people point to after the fact. Treat it with scepticism.
Trading implication
Know the expiry calendar. Behaviour on expiry days, and the session after, can differ from ordinary days.
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