The term expiration Friday refers to the last business day an option can be sold, purchased, or exercised before it expires. Expiration Friday occurs each quarter, and is characterized by higher than normal price volatility and trading volumes.
The expiration date for United States listed stock options, stock index futures, and stock index options is always the Saturday following the third Friday of the month. The preceding Friday, which is the last business day before expiration, is the last day these options can be sold, purchased or exercised. If that Friday happens to be a stock market holiday, then the last trading date would be Thursday.
Expiration Friday is the third Friday on the last month each quarter. Since investors oftentimes close out their positions on expiration Friday, or the trading days immediately preceding it, the market typically experiences a period of increased price volatility and higher-than-normal trading volumes. If the option is in-the-money on expiration Friday, the Options Clearing Corporation (OCC) will institute exercise by exception unless explicit instruction prohibits exercising the agreement. This ensures the holder of the option receives the intrinsic value of the contract.