When Do Expired Options Disappear From Your Account?

Options contracts provide investors with the right, but not the obligation, to buy or sell an underlying asset at a predetermined price on or before a specific date. This expiration date defines an option’s finite lifespan and influences its value. As this date approaches, investors often wonder what happens to their contracts and when these expired instruments cease to be visible in their brokerage accounts. Understanding option expiration and subsequent settlement is important for any investor holding these derivative instruments. This article explains the process, from an option’s expiration to its disappearance from your account records.

The Expiration Event

An option’s life concludes at its expiration date and time, which for most equity and exchange-traded fund (ETF) options in the United States is the third Friday of the contract month. At this point, the option’s status is determined by its “moneyness” relative to the underlying asset’s price. Options are classified as in-the-money (ITM), out-of-the-money (OTM), or at-the-money (ATM).

An option is ITM if exercising it would result in an immediate profit. For a call option, this means the underlying asset’s price is higher than the strike price. For a put option, the underlying price is lower than the strike price. Conversely, an option is OTM if exercising it would lead to a loss or no financial benefit. This occurs when a call option’s strike price is above the underlying asset’s price, or a put option’s strike price is below it. An ATM option has a strike price equal to or very near the current market price of the underlying asset.

Options that are OTM or ATM at expiration expire worthless. In such cases, the option holder’s maximum loss is the premium originally paid for the contract.

For ITM options, the process is different. The Options Clearing Corporation (OCC), the central clearinghouse for all listed options in the U.S., automatically exercises ITM options on behalf of the holder. This automatic exercise applies to equity and ETF options that are ITM by at least $0.01 at expiration. The OCC guarantees the obligations of options contracts, ensuring market integrity and reducing counterparty risk. While automatic exercise is the default, option holders can submit a “Do Not Exercise” (DNE) request to their broker to prevent an ITM option from being exercised.

Understanding Option Settlement

Following expiration, if an ITM option is exercised or assigned, a settlement process occurs to finalize the transaction. Options contracts can be settled in one of two ways: physical delivery or cash settlement. The method depends on the underlying asset and contract terms.

Most equity and ETF options are physically settled. Upon exercise, actual shares of the underlying stock or ETF are exchanged. For example, an exercised ITM call option results in the purchase of 100 shares of the underlying stock per contract, while an exercised ITM put option results in the sale of 100 shares.

Index options, such as those tracking the S&P 500, are cash-settled. With cash settlement, no physical shares are exchanged. Instead, the financial difference between the option’s strike price and the underlying index’s settlement value is paid in cash. This method is common for assets not easily deliverable, like an index. Cash-settled contracts are simpler and quicker to finalize, as they avoid the logistics and costs of physical asset transfer.

The timeline for settlements is important. Payment of the option premium settles on a T+1 basis, the next business day after the trade date. For exercised options, the settlement of underlying shares or cash also occurs on a T+1 basis. If an option is exercised on Friday (expiration day), the shares or cash settle in the account by the following Monday, assuming it’s a business day.

Brokerage Account Visibility and Removal

While an option’s record might not immediately vanish from your brokerage account after expiration, its functional life ends at that time. The delay in disappearance is influenced by settlement processes and individual brokerage firm policies.

Options that expire OTM or ATM and therefore expire worthless are removed from the active portfolio view quickly. These contracts hold no value and require no further action, so they disappear from active positions within one to three business days following expiration.

For exercised ITM options, removal is tied to the settlement of the underlying asset or cash. Once the shares or cash from the exercised option have settled in the account, the option contract is no longer an active holding. This settlement occurs on a T+1 basis after the expiration date, meaning the option record transitions out of the active portfolio within one to two business days. During this period, the brokerage platform might display the expired option differently, perhaps marking it as “expired” or moving it to a separate section for historical or closed positions.

Brokerage firms have varying procedures for how they display and remove expired options from client interfaces. Some may move them to a “past activity” or “expired positions” tab, while others may remove them from the primary portfolio view entirely once settlement is complete. This is a practical display matter rather than a functional one, as the option contract ceased to exist at its expiration time. The exact timeframe for complete disappearance can range from the end of the expiration day itself for worthless options to a few business days for exercised options awaiting full settlement.