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

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer a question, “Can you close short option trades before expiration?” The simple answer to this is yes, you can always close your option contracts before expiration and this does mean that you can do so on American-style and European-style option contracts. I think where people get confused is that they think about American and European-style options, but that only refers to the exercise process that it goes through. American-style options can be exercised at any time between now expiration and that means that most of your general contracts you’ll be trading on ETFs and stocks are American-style. European-style option contracts can only be exercised at expiration. These would be things that are more cash secured like RUT, NDX, SPX, etcetera. Now, again, this only has to deal with the exercise of the contracts and the conversion of those contracts from options to stock or cash. It has nothing t