The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha. Today, we’re going to be answering the question on the daily call here. “What happens when options expire out of the money?” This is actually a really simple one to answer. When options expire out of the money, nothing happens. No premium gets exchanged because the options basically are worthless and you don't have to deal with any stock. It's actually a very simple process because they just cease to exist. It’s very much like if you were to buy insurance on your car in case you get into a car accident. If at the end of the year, you don’t get into a car accident, then nothing happens. The policy expires. You don't get any money back as the option buyer. The insurance company as the option seller collects and keeps the entire premium and you just have to renew your policy and basically start over and start a new one. It’s very much the same process with options. When the options expire out of the money, the option buyer gets nothing, the option seller k