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Expiration Cycle

Definition of Expiration Cycle

Equity and index options expire on a predictable four-month schedule, two of which are determined by the expiration cycle to which the underlying instrument has been randomly assigned and two by when you purchase the option. There are three expiration cycles, one beginning in January, one in February, and one in March. Each cycle includes four months, and an option always expires in two of those months. The other two expiration months are the month in which it is purchased and the following month. For example, if you purchase an option on an equity assigned to Cycle 1, which includes January, April, July, and October, between January 1 and the third Friday in January you have a choice of contracts expiring in January and in February ÔÇö because they are the current month and the following one ÔÇö or in April or July ÔÇö because they are the next two months in Cycle 1. Similarly, if you purchased an option on the same equity in April, youÔÇÖd also have a choice of four expiration dates: April and May ÔÇö the current and following months ÔÇö and then July and October, the next two months in Cycle 1.

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