When Do Crypto Options Expire: The Key Timings You Need to Know

This isn't your traditional financial vehicle, and the expiration of these options can be the decisive moment that makes or breaks a trader. Unlike traditional stocks or commodities, where options expire on specific days like the third Friday of every month, crypto options operate on a different set of rules that you cannot afford to overlook. The trading week may stretch endlessly, but your crypto options face a finite deadline that can catch even seasoned traders by surprise.

So, what time do crypto options expire?

The short answer is: it depends on the exchange. Different platforms offer varying schedules, and this diversity is part of what makes crypto options so compelling—and so dangerous for the unprepared.

Let’s dive into specifics:

1. The Universal Time Zone Trap

Crypto never sleeps, but unfortunately, your options do. Many cryptocurrency options expire at 8:00 AM UTC (Coordinated Universal Time), the time zone that has become the standard for many leading exchanges like Deribit and Binance. This might seem straightforward, but the global nature of the crypto market means that this time could vary drastically depending on where you are in the world.

For instance, if you’re trading from New York, this would be 4:00 AM during Daylight Savings Time, a precarious time to be making significant financial decisions. If you're in Hong Kong, that’s 4:00 PM, possibly during your busy workday. The catch is simple: if you're not paying attention to these time zone differences, you might lose your window to act.

2. Weekly vs. Monthly Expirations

Most crypto options offer weekly expirations, and some larger, more liquid contracts offer monthly expirations. Here’s where it gets tricky: unlike traditional options in the stock market, where you might have a clear, consistent cycle (monthly on the third Friday), the crypto market offers a more flexible, but also more unpredictable, calendar.

Weekly options tend to expire every Friday at 8:00 AM UTC, and monthly options usually follow the same rule but on the last Friday of the month. This flexibility can be advantageous, giving traders more choices. However, it also introduces the possibility of confusion. If you are a trader not diligent about tracking expiration times, you could miss a profitable window or, worse, leave yourself exposed to unexpected losses.

3. The Different Exchanges, Different Rules Dilemma

Each crypto exchange sets its own rules. Deribit, for example, sticks to the Friday 8:00 AM UTC schedule for Bitcoin and Ethereum options. However, platforms like Binance and FTX allow for more exotic option structures with different expirations.

• Deribit: Known for having the most liquidity, offers standard expiry times at 8:00 AM UTC every Friday for both weekly and monthly options.
• FTX: Typically offers expirations more aligned with traditional finance, but with unique quarterly options. You can find options expiring at the end of March, June, September, and December, matching financial quarters.
• Binance: Often provides more flexibility in terms of daily options, allowing expirations on any day of the week, which can be convenient or potentially dangerous for an unseasoned trader who isn’t tracking multiple options simultaneously.

Being familiar with the platform you're using is essential. These expiration differences can lead to wildly varying outcomes, depending on the market movements in the lead-up to expiry.

4. Time Decay and Implied Volatility

The timing of crypto options expiry doesn’t just matter for when you can trade; it’s also critical to the pricing. Time decay—the reduction in the value of an option as it approaches its expiration—accelerates in the final few days before expiry. In other words, if you're holding onto an option contract and waiting for a particular market move, time decay could eat into your profits faster than you realize.

Moreover, implied volatility often spikes or drops dramatically as expiration nears, affecting the premium you pay for the options. This volatility can be influenced by market-moving events, economic news, or even the technical analysis many traders follow. If you’re unaware of how fast time decay happens or how volatility is calculated, you may find yourself scrambling to salvage profits in the hours leading up to expiry.

Keep this in mind: understanding how time decay works could save you from unnecessary losses.

5. Auto-Settlement: The Last-Minute Danger

Most platforms automatically settle options at expiration based on the underlying asset's price at the time of expiry. This means that even if you're not actively watching the market when your option expires, the exchange will still close out the position for you. The problem? Prices can be highly volatile in the minutes before expiry.

On platforms like Deribit, the last-minute swings in Bitcoin or Ethereum prices can be drastic. The contract may be in the money (profitable) one moment and out of the money (worthless) the next. This uncertainty can lead to significant, unexpected losses or, conversely, sudden windfalls. Not being ready to close or adjust your position before that final price settlement can turn a win into a loss in the blink of an eye.

6. The Hidden Pitfalls of Low Liquidity

While Bitcoin and Ethereum options tend to be relatively liquid (you can enter or exit positions without significant price slippage), the same can't be said for smaller cryptocurrencies. Low liquidity means wider bid-ask spreads, which can eat into profits and make it difficult to get out of a position before expiration. If you’ve ever traded options on an illiquid asset, you know that getting stuck in a position with no willing buyers or sellers can be a nightmare.

It's easy to overlook liquidity when you're thinking about the bigger picture. After all, you might be more focused on whether Bitcoin is going to rally in the next week. But neglecting liquidity risks can mean you're holding a bag of losses when your option expires.

Trading options on highly liquid assets like Bitcoin and Ethereum might save you from this pitfall, but always check liquidity before entering a trade.

7. Final Takeaway: Stay Vigilant

Crypto options expiry isn’t just a date on the calendar—it’s a pivotal moment that can determine whether you walk away with a profit or a loss. The decentralized, 24/7 nature of cryptocurrency markets means that unlike traditional stock options, where you might have a full understanding of market cycles, crypto options introduce a level of complexity that requires ongoing vigilance. Failure to track time zones, liquidity, and volatility could leave you out in the cold, but staying informed can make all the difference.

If you want to make the most of crypto options, set alarms, track your expirations closely, and always stay one step ahead of the market’s clock.