Days to Expiration (DTE)

Days to Expiration, usually written as DTE, is a simple count of how many calendar days remain before a derivatives contract — most commonly an option, but also some futures contracts — stops trading and settles.

Every option contract has a built-in deadline. After that date, the contract either gets exercised, expires worthless, or gets settled in cash, depending on what it is and how it's structured. DTE is just the running clock on that deadline: an option with 45 DTE expires in 45 calendar days, an option with 2 DTE expires in two days.

DTE matters because it directly drives an option's price. Part of what you pay for an option is time value — the possibility that the underlying stock or asset moves in your favor before expiration. As DTE shrinks, that time value shrinks too, a process traders call time decay. This decay is not linear: it accelerates as expiration approaches, which is why an option with 5 DTE loses value much faster, day to day, than one with 90 DTE.

The nuance that trips people up is that DTE counts calendar days, not trading days, but the decay itself is really tied to trading days and the actual time markets are open. A weekend adds two calendar days of DTE but no trading activity, so decay calculations and pricing models adjust for that unevenly rather than ticking down at a constant daily rate.