Gold options expiration dates define a limited time period that you can use to exercise your option to buy in case of a call option or to sell in case of a put price option. If you do not use your options before gold options expiration dates, you have just wasted money you used for purchasing these options. These investment mechanism is very similar to gold futures, however, in the futures situation you are obligated to buy or sell at a set price, whereas with an option you have a choice.
Gold options expiration dates for each month are standard for gold options trading on NYSE and fall on the 4th business day of the corresponding gold futures delivery month. In case the expiration date falls on a holiday, it’s moved up one day to account for the market day off.
Option expire dates are set within clearly defined gold futures trading calendar cycles, namely JAJO, FMAN and MJSD. These capital letters represent the first letter of the corresponding month. For example, JAJO stands for January, April, July and October. Having this clearly defined system helps add order and uniformity to options trade market.
Sellers of these investment mechanisms base their entire strategies on selling hoping that the buyers are not going to exercise them by the gold options expiration dates, so they keep the profits. Many major bullion banks profit on the day the options expire in the attempts for these to be left unexercised by manipulating yellow precious metal prices to fall for a short period of time. Inexperienced precious metals investors might be under the impression that gold has hit its long term low and never exercise their options inadvertently letting bullion banks profit from selling their gold options. This scenario explains why inexperienced futures traders might panic when the gold prices sharply fall within a day or two before set expiration dates. Experienced gold futures trading specialists are aware of this scenario and hold on to their assets knowing that in a short period precious metal prices are going to get balanced out.
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