What Happens at Expiration?
Dec 29, 2025Expiration is one of the most important — and misunderstood — parts of options trading. If you hold an option all the way until the expiration date, the consequences depend entirely on whether the option is in the money or not.
If your option is out of the money, it will expire worthless and disappear. That means you lose 100% of the premium you paid.
But if your option is in the money, you may be automatically exercised or assigned. For call options, that usually means you’ll be forced to buy 100 shares per contract. For put options, it means you’ll have to sell 100 shares.
It’s crucial to know whether your broker will automatically exercise ITM options — and whether you have enough capital in your account to handle it.
As a rule, if you’re unsure about what will happen, it’s always safer to close your trade before expiration.
Stay tuned for more practical, simple explanations in future lessons.