The date convention changed in 2015, and the older version is still in circulation, including on a document a reader is likely to reach first. Until February 2015 most option contracts expired on the Saturday after the third Friday. FINRA's own rule filing recording the change put it plainly: the clearing corporation was "streamlining its options expiration procedures to change the expiration date for most option contracts to the third Friday of the expiration month instead of the Saturday following the third Friday," and the change applied to standard expiration contracts expiring after 1 February 2015, after which "virtually all Standard Expiration Contracts will expire on Friday." The SEC's investor bulletin on options, whose banner reads "Updated July 16, 2026," still carries the older sentence in its terminology section, while its own worked examples in the same document use the third Friday. A reader who meets the Saturday version should treat it as a survival rather than as a current rule.
What happens at expiry is automatic unless the holder intervenes, and this is the part that produces unpleasant surprises. FINRA Rule 2360(b)(23)(A)(ii) states that, unless waived by the clearing corporation, expiring standardized equity options are subject to "the Exercise-by-Exception ('Ex-by-Ex') procedure under The Options Clearing Corporation Rule 805," which "provides that, unless contrary instructions are given, standardized equity option contracts that are in-the-money by specified amounts shall be automatically exercised." The rule says "specified amounts" and states no figure; the operating threshold is set by the clearing corporation. So a holder who intends to let a slightly in-the-money contract lapse must act, because inaction is what triggers exercise.
The instrument for saying no is a Contrary Exercise Advice, and it also works in the other direction. Rule 2360(b)(23)(A)(iv) defines it as a form approved by the options exchanges, FINRA or the clearing corporation, used to commit a holder either to "not exercise an option position which would automatically be exercised" under Ex-by-Ex, or "to exercise a standardized equity option position which would not automatically be exercised" under it. An advice can be canceled or resubmitted up to the deadline. So a holder who wants to exercise a contract that is out of the money, or fractionally in it and below the automatic threshold, uses the same form.
Two deadlines, and only one of them belongs to the investor. Rule 2360(b)(23)(A)(iii) is the customer-facing one: "option holders have until 5:30 p.m. Eastern Time ('ET') on the business day of expiration ... to make a final exercise decision to exercise or not exercise an expiring option," and members "may not accept exercise instructions for customer or non-customer accounts after 5:30 p.m. ET." The member's own deadline for submitting the advice for a customer account is 7:30 p.m. ET. Most brokerages set their own earlier cut-offs, which Rule 2360(b)(23)(A)(vi) expressly permits: a member "may establish a processing cut-off time prior to FINRA's exercise cut-off time at which they will no longer accept final exercise decisions in expiring standardized equity options from customers." The number that binds a particular investor is the firm's, and it is usually well before 5:30.
Two scope limits on that deadline, both easy to miss. First, the cut-off requirements apply to standardized equity options: Rule 2360(b)(23)(A)(xi) provides that they "do not apply to any currency option or standardized index option products listed on a national options exchange," so a holder of an index option is working to their firm's and the clearing corporation's timetable rather than to 5:30 p.m. ET. Second, 5:30 p.m. is the deadline that goes with an ordinary 4:00 p.m. close. Where an exchange or the clearing corporation announces a modified close, Rule 2360(b)(23)(A)(viii) resets the holder's deadline to one hour and thirty minutes after the announced close instead.
The gap between the market close and the decision deadline creates a real problem for anyone short an option that finishes near the strike. Trading in standardized equity options ends at 4:00 p.m. ET on an ordinary day, and holders can decide until 5:30 p.m. ET. The rule itself treats that ninety minutes as the gap: where a modified close is announced, it moves the holder's deadline to an hour and a half after whatever the new closing time is. A writer of an option whose underlying closes at or very near the strike therefore cannot know whether they will be assigned until after the market has closed and after they have lost the ability to hedge the position that assignment would create. Traders call this pin risk, which is market vernacular rather than a defined regulatory term, but the exposure it names is a direct consequence of the two clocks running at different times. The writer's side of the whole mechanism is covered on our page for options assignment.
Not every expiring option is exercised by exception. Rule 2360(b)(23)(A)(v) covers classes for which the clearing corporation has waived the Ex-by-Ex procedure. In those, a holder who wants to exercise must submit a Contrary Exercise Advice affirmatively and the member must submit an exercise notice, and a holder who does nothing simply lets the option expire. The underlying price used in the waived case is described in the clearing corporation's Rule 805, normally the last sale price in the primary market for the underlying security.
Expiration cycles have multiplied, and the third Friday is no longer the whole story. Weekly expirations on other Fridays are long established, and exchanges have since added end-of-month expirations and, on several broad index products, expirations on Mondays through Thursdays. Where index options and index futures expire together on the third Friday of March, June, September and December, the market calls it triple witching. The extreme case, a contract bought and expiring on the same session, has become a distinct market phenomenon with its own risks and is covered on our page for zero-days-to-expiration options.
