Market mechanics · Expiration & exercise
Options expiration explained: what happens between the last trade and Monday
On expiration day, trading in US equity options ends at 4:00 pm ET. After that a rulebook takes over from the market: the OCC exercises any option that is at least $0.01 in the money automatically, and holders can still decide otherwise until 5:30 pm ET. That is why someone short an option near the strike often learns only on Saturday or Monday whether they have been assigned.
By Daniel Berg ·
Auto-exercise from
$0.01 ITM
- Equity options last trade
- 4:00 pm ET
- Exercise cut-off (exchange rule)
- 5:30 pm ET
- Monthly SPX options
- Thursday, AM-settled
- DAX options (Eurex)
- 13:00 CET
Your broker may set earlier cut-offs, and usually does.
Expiration day, hour by hour
Standard options on US stocks and ETFs expire on the third Friday of the month; weeklies on their own expiration day. Expiration day is also the last trading day.
| Time (ET) | What happens |
|---|---|
| 9:30 am | The open. Monthly SPX options have already stopped trading; their settlement value is built from the opening prices of the S&P 500 stocks. |
| 4:00 pm | Trading ends in expiring equity options and in expiring SPXW and XSP options. Some large ETF options (e.g. SPY, QQQ) may trade until 4:15 pm under exchange rules. |
| 4:00–5:30 pm | The expiring series no longer trades, but the stock keeps trading after hours. Holders can exercise or submit a do-not-exercise instruction. |
| 5:30 pm | Latest time for exercise decisions under exchange rules. Brokers set their own, earlier cut-offs. |
| Friday night | The OCC processes exercises and assigns them at random to clearing members with short positions; brokers pass them on to customers. |
| Saturday/Monday | Assignments show up in the account. Per contract, a short call becomes 100 shares short and a short put 100 shares long. |
Last trade: equity options vs index options
On a normal day, options on broad indexes such as SPX and XSP, and on some large ETFs, trade until 4:15 pm ET, a quarter of an hour after the stock market closes. For PM-settled index options that does not apply to the expiring series: under Cboe Rule 5.1 it closes at 4:00 pm, so the settlement value (the index close) is fixed. Non-expiring series keep trading until 4:15 pm. For ETF options such as SPY the exchange rules contain no such carve-out: expiring series may trade until 4:15 pm even though the ETF shares themselves close at 4:00 pm. Whether your broker offers those last minutes is up to its terms.
| Product | Last trading day | Trading ends | Settlement |
|---|---|---|---|
| Equity options (e.g. AAPL) | Expiration day | 4:00 pm ET | Delivery of 100 shares per contract |
| ETF options (e.g. SPY, QQQ) | Expiration day | until 4:15 pm ET (exchange rule) | Delivery of 100 shares per contract |
| SPXW, XSP (PM-settled) | Expiration day | 4:00 pm ET | Cash, on the S&P 500 close |
| Monthly SPX (AM-settled) | Thursday before expiration | 4:00 pm ET (Thursday) | Cash, on Friday’s opening value (SET) |
ETF options such as SPY are used for hedging just like index options, but they are American-style and physically settled: an exercised SPY put means 100 SPY shares, not cash. SPX options are European-style (no early exercise) and cash-settled. Being assigned "into shares" does not happen with SPX.
Exercise: the 5:30 pm cut-off and auto-exercise at $0.01
The OCC automatically exercises expiring equity and ETF options that are at least $0.01 in the money. The procedure is called exercise by exception: everything above the threshold is exercised unless the holder says otherwise. What counts is the stock’s closing price in regular trading, not the after-hours price.
- Not exercising an in-the-money option: a holder can submit a do-not-exercise instruction, for example when the stock has fallen after hours and exercising a call no longer pays.
- Exercising an out-of-the-money option: a holder can also exercise a call that closed just out of the money because the stock rose after 4:00 pm, say on company news.
- Deadline: under exchange rules these instructions are due by 5:30 pm ET. Many brokers want them much earlier, and some take them by phone only.
- No money, no shares: if the account lacks the cash or margin to exercise, many brokers close the position themselves on expiration day, or decline to exercise. Those rules live in your broker’s terms, not at the OCC.
Pin risk: when price sticks to the strike
Pin risk hits the seller of an option when the stock closes at or very near the strike. They cannot know whether the other side will exercise, because holders decide until 5:30 pm ET and can take after-hours prices into account: if the stock rises after 4:00 pm, call holders are more likely to exercise; if it falls, they let the option lapse. The reverse applies to puts.
Round, illustrative assumptions, not market data.
- Position
- 1 short call
- Strike
- $50
- 4:00 pm close
- $49.98
- After hours
- $51.20
1At the close
The option is $0.02 out of the money. The OCC would not auto-exercise it, and the seller expects it to expire worthless.
2After-hours news
The stock jumps to $51.20. A holder can still exercise until 5:30 pm ET and buy at $50 something that now trades at $51.20.
3Saturday
The seller learns of the assignment: they are short 100 shares at $50. Without shares in the account, that is an unplanned short sale.
4Monday
If the stock opens at $52, the loss is about $200 against the strike, on a position that "expired worthless" on Friday.
Pin risk does not come from a wrong market view but from not knowing what the other side will decide. The only sure protection is to buy back short options near the strike before 4:00 pm.
Assignment over the weekend
Between Friday’s expiration and Monday’s open you cannot react to an assignment. After expiration the OCC assigns exercises at random to clearing members holding the matching short position; brokers allocate them to customers by their own disclosed method. You usually see the result on Saturday or early Monday.
- Short put assigned: you buy 100 shares per contract at the strike. Without the cash, you end up with a margin loan or a call for funds; see margin call.
- Short call assigned, no shares held: you are short 100 shares per contract. A gap at Monday’s open is entirely yours.
- Covered call assigned: your shares are sold at the strike. That is the planned outcome, but it is also a taxable sale.
For the wheel strategy and covered calls, weekend assignment is part of the plan. It becomes dangerous where it was not planned: in spreads whose protective leg has expired, and in short options right at the strike.
Spreads that finish partly in the money
A vertical spread has limited risk until expiration because the long leg covers the short one. On expiration day that cover can come apart: if price closes between the two strikes, the short leg is assigned while the long leg expires worthless.
Round, illustrative assumptions, not market data.
- Short put
- $100 strike
- Long put
- $95 strike
- Spread max loss
- $500 less premium
- Close
- $98
1Friday, 4:00 pm
The 100 put is $2 in the money and is auto-exercised. The 95 put is out of the money and expires worthless.
2Saturday
You buy 100 shares at $100 = $10,000. The protection from the 95 put no longer exists.
3Monday
If the stock opens at $88 on bad news, the paper loss is $1,200, more than twice the maximum loss the spread had until Friday.
A spread is only "defined risk" until expiration. If price sits between the strikes on expiration day, close the spread before 4:00 pm, or at least the in-the-money leg.
The same applies to each side of an iron condor. Cash-settled index options such as SPX do not have this problem: only the difference is settled in cash, and no share position is created. More in spreads explained.
AM vs PM settlement: SPX and SPXW
There are two families of S&P 500 options on the same underlying, settled differently. Mixing them up can mean a surprise on Friday morning.
| Monthly SPX | SPXW (weeklies and dailies) | |
|---|---|---|
| Expiration | Third Friday | Every trading day (Monday to Friday) |
| Last trade | Thursday before | Expiration day, 4:00 pm ET |
| Settlement value | Friday opening prices of the 500 stocks (ticker SET) | S&P 500 close on expiration day |
| Style | European, cash-settled | European, cash-settled |
With AM settlement trading stops on Thursday evening, but the settlement value is only built on Friday morning from each stock’s opening price. It can differ noticeably from Thursday’s close and even from the first index print on Friday, because the stocks do not all open at the same moment. Between 4:00 pm Thursday and Friday’s open you cannot close the position: the overnight risk is all yours.
Weeklies and 0DTE: every day is an expiration day
Alongside the monthly cycle there are weekly options. For SPX and XSP and the big index ETFs SPY, QQQ and IWM, exchanges list expirations for every trading day, Monday to Friday. That is why zero-days-to-expiration (0DTE) options exist there daily, and why every rule in this guide applies every day.
For single stocks, weeklies long expired on Fridays only. Since January 2026, following SEC approval, the US options exchanges also list Monday and Wednesday expirations for a small group of very large, very liquid names; the criteria include a market cap above $700 billion and more than 10 million option contracts traded per month. The first list included TSLA, NVDA, AAPL, AMZN, META, MSFT and GOOGL; it is reset every quarter, and no such expiration is listed on a day with after-the-close earnings. Your broker’s option chain shows which names currently qualify. Expiration works the same way: last trade 4:00 pm ET, auto-exercise at $0.01, exercise cut-off 5:30 pm ET, just in the middle of the week.
The Eurex equivalents for German traders
On Eurex, expiration is also the third Friday of the month, or the exchange day before it when that Friday is a holiday. Times and settlement rules differ markedly from the US. All dates for 2026 and 2027 are in the witching-day calendar.
| DAX options (ODAX) | Euro Stoxx 50 options (OESX) | Equity options | |
|---|---|---|---|
| Trading ends on expiration day | 13:00 | 12:00 | 17:30 |
| Settlement | Cash, DAX from the Xetra intraday auction starting at 13:00 | Cash, average of the index from 11:50 to 12:00 | Delivery of the shares |
| Style | European | European | American (exercise on any exchange day) |
As with SPX, DAX and Euro Stoxx options hinge on one settlement price around midday, not the close. And as in the US, Eurex automatically exercises in-the-money long positions on expiration day, by default from 0.01 in the money, though clearing members can change the minimum or abandon positions. Exercise instructions are accepted until 20:30 for index options and 20:00 for equity options; exercised equity options settle by delivery two exchange days later. How your broker handles barely-in-the-money positions and missing cover is set by its own terms. Many retail traders in Germany trade options through brokers that do not offer Eurex contracts at all, in which case the US rules in this guide apply.
Weekly DAX and Euro Stoxx 50 options on Eurex expire on the Friday of their week. For daily expirations there are separate end-of-day contracts (OEXP on the Euro Stoxx 50, for example) that can expire on any exchange day and settle on the 17:30 closing auction, not on the midday auction used for the monthly options.
Expiration-day checklist
- 1Know your broker’s cut-offs. When is its deadline for exercise and do-not-exercise instructions, and does it close uncovered positions itself?
- 2Close short options near the strike before the close. Before 4:00 pm ET for US options, before 13:00 for DAX options.
- 3Do not let spreads expire between the strikes. At least close the in-the-money leg.
- 4Sell long options you do not want exercised. A call $0.05 in the money will otherwise be exercised, with the full cash need for 100 shares.
- 5Check the settlement type. Monthly SPX (Thursday, AM) or SPXW (Friday, PM)? ETF (delivery) or index (cash)?
- 6Check the account on Saturday or early Monday. Deal with unexpected share positions before the market opens.
Frequently asked questions
When exactly do US options expire?
Standard options on stocks and ETFs expire on the third Friday of the month; weeklies on their own expiration day. For equity options, trading in the expiring series ends at 4:00 pm ET; some large ETF options such as SPY may trade until 4:15 pm. Since 2015, the Friday itself is the expiration date, no longer the Saturday.
What happens if I do not sell an in-the-money option?
If it closes at least $0.01 in the money, the OCC exercises it automatically. With a call you buy 100 shares per contract at the strike; with a put you sell 100 shares. If you lack the funds, many brokers close the position themselves beforehand, often at poor prices.
Can I still exercise after 4:00 pm?
Yes. Under exchange rules, exercise decisions are due by 5:30 pm ET. You can no longer trade the expiring option after 4:00 pm. Your broker usually sets an earlier deadline, and its deadline is the one that counts.
What is pin risk?
The risk an option seller faces when the stock closes right at the strike. Because holders decide until 5:30 pm ET and can weigh after-hours moves, the seller does not know for sure until Saturday or Monday whether they will be assigned.
What is the difference between SPX and SPXW?
Monthly SPX options last trade on the Thursday before the third Friday and settle on Friday’s opening value (AM settlement). SPXW options expire every trading day and settle on the close (PM settlement). Both are European-style and cash-settled.
Can my spread lose more than its maximum loss?
Yes, if it is held to expiration and price closes between the strikes. The short leg is then assigned while the long leg expires worthless, and you hold an unhedged share position over the weekend. Cash-settled index options do not carry this risk.
Do the same rules apply on Eurex?
Expiration is the third Friday there too, but the times differ: DAX options trade until 13:00 and settle on the Xetra intraday auction, Euro Stoxx 50 options until 12:00, equity options until 17:30. Index options settle in cash, equity options by delivery.
Where to go next
All numerical examples in this guide are rounded, illustrative assumptions, not market data. The content is educational and not investment advice. Options are complex instruments; you can lose the entire amount invested, and more than that when selling options.