Every option has an expiration date - a deadline. Before it, you are paying for time; at it, the option is worth only what it is worth right then, and then it is gone. Drag the slider to buy an at-the-money $420 TSLA call that is anywhere from 1 day to 2 years out, and watch how much of its price is real value versus time.
Time value melts as expiration nears
Option price (all time value at the money) Your chosen day
Weeklyexpires Friday
Monthly3rd Friday
A few monthsquarterly
LEAP1 year+
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This $420 call
Option price
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Intrinsic value (real value now)
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Time value (the deadline premium)
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Costs you per contract (x100)
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IntrinsicTime value
Plain English
What happens AT expiration
If the call is in the money (spot above the strike), it is automatically exercised or sold for its intrinsic value. If it is out of the money, it expires worthless - and a call you bought costs you only the premium you paid, nothing more.
The common types
Weeklies expire most Fridays. Monthlies expire the third Friday of the month. Quarterlies land at quarter-end. LEAPS are long-dated, a year or more out - the most time value, the slowest decay.
Three things to know about expiration:
The date is a hard deadline. After expiration an option is worth only its intrinsic value, and then it is gone - there is no next day to wait for.
A bought option that expires out of the money just costs the premium. That is your whole loss on a long option - no margin call, no extra bill.
More days means more time value and slower decay. Longer-dated options cost more but hold their value steadily; short-dated ones are cheap but bleed time value fast as the deadline nears.
Taxes are not shown here. Options and the underlying stock are taxed differently, and it depends on your holding period and account type. None of this is tax advice.