In the financial market, the notion that a trader should act does not count. It is also extremely difficult to assess their importance. In today’s article we will talk about one of them – about expiration.
Traders on the Stock Exchange or Forex are more familiar with expiration than the rest. They know that the expiry date is the deadline for the execution of urgent orders per day, which has been set (or fixed) by the trader well in advance.
After reading this article, new comers will find out what impact the term has on the auction, how to correctly select dates, and why the term exists at all.
As described in the initial part of the article, expiry is a kind of “expiry date” of a transaction which the trader himself determines. However, not everything is so simple and elementary. Let’s take an example.
You probably know that fixed-term contracts have an end date, which is the closing date of a position. Formally, on this closing date, one party to the transaction meets the terms of futures contracts or options, and the other – refuses this and loses funds.
The trading platform itself at this point automatically calculates all the terms of the contract that has not been closed before the deadline. And then:
contracts are closed, the expiry date of which has come; Stop bidding them; Transactions on those contracts that have not expired do not end. 101.000 The expiry date can not come up with “just like that”, it depends on the rules of the exchange and the dance floor. Expiry is also often referred to as a case where a trader has closed the contract on his own initiative before the deadline. For example, futures contracts in most cases have quarterly characteristics and close in the last months of the quarter, but on the day that the administrators of the trading platform set and indicated it in the so-called exchange calendar. The expiry dates of futures contracts can be found on the website of each exchange.
As regards options, they may close weekly, month or quarterly. The expiration of quarterly options may be the same as the expiration date of quarterly futures contracts.
Most often, the actual settlement of the contract is carried out immediately on the first trading day after expiry.
Why it is important for a trader to follow the expiry of
is something that a trader on the stock exchange should constantly observe. At least because his income depends on it.
These days, shortly before the expiry of futures contracts, its price has risen sharply against the main asset. This is due to speculative actions of market participants who do not want to wait until the deal is over and futures start to close. But on the other hand, this is a normal phenomenon on the stock market, because each party, whether buyers or sellers, are fighting for primacy and maximizing income.
The market will be affected not only by the activities of brokerage companies and dealers but also by the extent to which derivative assets are distributed to market participants.
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