Derivatives Expiration

Derivatives expiration is the date and time when a futures or options contract ceases to exist and is settled. At expiration, the contract is either settled in cash or by physical delivery of the underlying asset.

The period leading up to expiration often sees increased volatility and trading volume as traders roll over their positions or close them out. In crypto, the expiration of large monthly or quarterly options can create significant price pressure, a phenomenon known as "max pain," where the market moves toward a strike price that causes the maximum number of options to expire worthless.

Understanding the mechanics and timing of expiration is essential for managing portfolio risk and identifying potential market turning points.