How expiry works on a derivative
Expiry is the date a derivative contract ceases to exist and must be settled. Futures and options have fixed expiry dates set by the exchange; on the expiry date the contract settles, either by delivering the underlying or, far more commonly, by cash settlement of the difference. After expiry the contract is gone, so a trader must close, roll, or let it settle before that date.
Worked example
You hold an index future expiring on the third Friday of the month. If you do nothing, it cash-settles at the official closing level that day and the position closes automatically. To keep exposure you would roll into the next month’s contract before expiry. Options add a twist: an option finishing out of the money expires worthless, so timing matters even more.
Expiry and CFDs on Volity
Many Volity CFDs track spot or rolling prices and have no fixed expiry, so you can hold without an expiry deadline, paying only overnight financing. Where a CFD is built on a dated future, rollover handles the expiry for you. Knowing whether your instrument expires tells you whether a calendar deadline is part of your risk.
Why it matters
Expiry can close a position or render an option worthless on a fixed date, so missing it turns a good trade into a forced exit at the worst moment. Always know your instrument’s expiry, or that it has none. Related: rollover and perpetual contract.
Learn more in our CFD trading guide.
