Expiration Cycles

Expiration cycles refer to the scheduled dates when derivative contracts cease to exist and are settled. These cycles vary depending on the instrument and the exchange, with some offering daily, weekly, monthly, or quarterly expiries.

The expiration cycle is a critical factor in planning, as it dictates the duration of the exposure and the timing of necessary roll-overs. During expiration events, there is often increased market activity as traders close out positions, roll them into future cycles, or allow them to expire.

This can lead to increased volatility and potential price manipulation near the settlement time. In the crypto industry, quarterly futures expiries are major events that often coincide with significant market movements.

Understanding these cycles allows traders to align their strategies with the natural rhythm of the market and to avoid being caught in liquidity crunches during settlement.