2024 Options Expiration Calendar: What Are the Key Dates for Options Investors?

Options have a finite life that ends at expiration. Savvy options investors are marking their calendars with crucial events that could impact their trading strategies. From expiration dates to presidential elections, understanding these pivotal moments can be important to navigating the markets effectively.

A staple in an options trader's calendar, expiration dates set the evergoing rhythm. Expiration Date is crucial for investors to understand because it can affect the value of an option contract. At the close of business on expiration day, any contracts not closed will expire worthless unless they are In-the-money (ITM) with positive intrinsic value.

Standard options typically expire on the third Friday of each month, providing a predictable pattern for strategizing. However, investors should also be aware of options with shorter expiration dates: weekly expirations, daily options, and more. Additionally, LEAPS (Long-Term Equity Anticipation Securities) typically expires in January, offering a long-term perspective for more patient investors.

Among all expirations, options investors would pay the most attention to the Triple-Witching Day, a financial event when the expiration of stock index futures, stock index options and stock options occurs on the same day. It typically creates short-term bursts of extra volatility and trading volume in the financial markets as multi-trillions worth of options expire on the same day.

Many traders are likely exercising their long contracts that are deep in the money, while some roll their positions, forcing some market-makers to continue to hedge their exposure. At the same time, managers of index-tracking funds may need to finish adjusting their holdings before the announced index changes take effect.

Trading in options surged 478% in the past decade, dwarfing the 142% growth in futures, according to data compiled by the Futures Industry Association, an industry group, which means the impact of Triple-witching is also increasing as the number of expiring options has been reaching for new highs.

In reaction to decreasing inflation, the majority of Fed members anticipate lowering rates this year and beginning to unravel the most aggressive tightening campaign in four decades. However, they have also underlined that their actions are contingent upon future advancements in pricing and will be directed by newly received information.

Federal Reserve meetings, occurring approximately every six weeks, can dramatically affect market volatility and direction. Fed-funds futures reflected a 52.7% probability the Fed will cut rates by at least a quarter point by the Fed's March meeting on Monday, down from 79% on last week, according to the CME FedWatch tool. Unexpected shifts in monetary policy can lead to significant market movements.

The presidential election expected in November this year also brings a unique form of uncertainty to the markets. Policy changes, economic agendas, and shifts in investor sentiment can all lead to increased market volatility that could drastically impact option value.

Historical data shows markets have tended to rise in presidential election years, with the S&P 500 recording positive returns in 20 of the 24 election years since 1928, or 83.3% of the time.

The average return for those election years was 11.58%, according to figures from First Trust. That's well above the S&P 500 average return of 9.81% for all years since 1928.2, according to the First Trust's research.

In the ever-changing landscape of options trading, staying informed about these key dates is crucial. By understanding and anticipating these events, options investors can better tailor their strategies to adapt to market conditions. Flexibility and informed decision-making should be checked in the decision-making process.

Earnings seasons – occurring quarterly – are a critical time for options traders. As companies report their financial performance, significant stock price movements can occur. Options investors should prepare for increased volatility during these periods and consider strategies that seek to capitalize on or hedge against this volatility.