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BCI PODCAST 55 Expiration Dates Versus Expiration Times Clarifications

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Expiration dates define the last time option traders can take action whereas expiration times specify when an option-contract becomes null and void. Understanding the differences can impact how we manage our trades. This podcast also explains the mechanism of the Options Clearing Corporation (OCC) and details how and when an out-of-the-money strikes may be exercised after contract expiration.

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

2 Responses to “BCI PODCAST 55 Expiration Dates Versus Expiration Times Clarifications”

  1. Sunny May 15, 2021 9:40 am #

    Interesting video, Alan, thanks.

    Yesterday I was in such situation with PMCC trade on WMT. I had $140 call expiring 05/14 and WMT was trading around the strike price all day. I wanted to retain LEAPS option as WMT reports earnings on 05/18 and following your teaching I don’t want to have short option during ER. I decided not to risk and bought the short call back for $0.10 thinking that even if the stock will close below the strike price there might be some gap up aftermarket and the option might be exercised.

    I bought the option back for $0.10, 2 hours before the market close when WMT was trading at $139.65, so there was still some time value left. My concern was that during the last trading hour the stock might go up sharply (and that happens from time to time, especially in these volatile markets) and it will finally end ITM, let’s say at $140.50. In this case I will need to spend $50 to buy it back and 2 hours prior the market close I can close the position for only $10 per contract. This time the stock ended below the strike price, but it put me on some dilema. When the stock trades around the strike price waiting until the last hour of market session might be some kind of lottery. The price can go in your favor, but it might go against you as well.

    Do you have any advice what to do in situations like this?

    Sunny

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