Last Trading Day

Last Trading Day is the final date on which a specific contract, most often an options or futures contract, can be bought or sold before it stops trading entirely. After this day, the contract is gone: it either expires worthless, gets exercised, gets settled in cash, or gets settled by delivery of the underlying asset, depending on what kind of contract it is.

Every options and futures contract has a lifespan. It is created, it trades for a while, and then it reaches a point where the exchange simply stops allowing trades in it. Last Trading Day is that cutoff point, and it is usually, but not always, the day right before expiration itself. For many US equity options, that has traditionally lined up with the third Friday of the expiration month, but plenty of contracts expire weekly, monthly on other schedules, or on dates set by the exchange for that specific product, so "third Friday" is a pattern, not a rule you can apply everywhere.

The nuance that trips people up is that Last Trading Day and expiration date are not always the same calendar day, and the trading window on that final day is sometimes shortened or restricted compared to a normal session. Futures contracts in particular can have a Last Trading Day that falls days or even weeks before the actual settlement date, and the exact time trading stops on that day can be earlier than the regular close. Traders who assume they have until 4pm to exit a position, when the contract actually closed for trading at noon, can find themselves stuck holding something they no longer wanted.

Because the specific date and cutoff time depend on the exchange, the product, and sometimes the expiration cycle within a given month, this is not something to estimate from memory. It has to be checked against the contract specifications published by the exchange or the broker for that particular symbol.