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Options Myth: 90% of all options expire worthless

Fact: According to the Chicago Board Options Exchange (CBOE), only 10% of option contracts are exercised. That does NOT mean 90% of options contracts then expire worthless.

Instead, the CBOE reports that 55% to 60% of options contracts are closed out prior to expiration. This changes everything. Whether those options are closed out for a gain or a loss isn’t know, but it shows that 90% of options do not, in fact, expire worthless.

More numbers, per the Options Clearning Corporation (OCC):

According to historical OCC statistics for the year 2015 (for activity in customer and firm accounts), the breakdown is as follows:

  • Position closed by selling the option: 71.3%

  • Exercised: 7.0%

  • Held and allowed to expire worthless: 21.7%

So you can see the even MORE positions are closed out per the OCC.

Selling options isn’t inherently better than buying options.


Author: Trader Court

CPA first, pivoted to python programmer focused on data science which I apply to my own stock and options trading.

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