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Options Expiration, Assignment, and Exercise There are a few different ways your stock options can meet their logical end. In many options strategies, it might make sense for you to buy to close or sell to close your option contract(s). However, there are also scenarios where you might prefer to let your contracts expire worthless, or even exercise your option to buy or sell the underlying stock.

Here's our beginner's guide to options expiration, assignment, and exercise. Options Expiration If you're trading traditional monthly equity options, expiration will fall on the Saturday following the third Friday of each month. Weekly options are typically listed each Thursday and expire on Friday of the following week (although no weeklies are offered during the expiration week for monthly options). In both cases, that final Friday is your last chance to take action on the trade.

Otherwise, the market will decide your course of action for you. If your option is out-of-the-money on expiration Friday, you might simply choose to let the contract expire worthless. There will be very little time value remaining at this point for you to capture, so it's probably not worth the additional brokerage fees and commissions for you to sell to close. If you take no action to close an out-of-the-money option prior to expiration, it will expire worthless.

No further action is required on your part to exit the trade. In fact, there are a number of strategies where the best-case scenario involves your options expiring worthless -- including multiple premium-selling tactics, such as the short put spread and short call spread. In these strategies, you collect your maximum potential profit upfront, so the ideal outcome is for all of the options involved to remain out-of-the-money through options expiration. Assignment As noted above, when you take up the selling end of an options trade, you'd most frequently like to see the contracts expire worthless. However, if your sold options move into the money by expiration, you are at risk of assignment. This means the buyer on the other end of the transaction may exercise their option for you to either sell (in the case of a call) or buy (in the case of a put) shares of the underlying stock at the strike price of the contract.