What happens to options when they expire?

What happens to options when they expire?

When options expire, they become worthless if not exercised. The holder loses the premium paid.

Can you explain what exercising an option means?

Exercising an option means using your right to buy or sell the underlying asset at the strike price before expiration.

What are the different types of options?

There are two main types of options: call options, which give the right to buy, and put options, which give the right to sell.

How can I avoid losing money on expired options?

To avoid losses, consider strategies like selling options before expiration or using stop-loss orders.

Are there any tax implications for options that expire?

Yes, if options expire worthless, you can claim a capital loss, but consult a tax professional for specifics.