General Securities Representative (Series 7) Practice Exam

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When do foreign currency options usually expire?

Saturday after the 3rd Friday of the expiration month
Saturday before the 3rd Wednesday
Last trading day of the month
Friday before the last trading day

The correct answer is: Saturday before the 3rd Wednesday

Foreign currency options typically expire on the Saturday following the third Wednesday of the expiration month. This timing aligns with the standard expiration practices for many options traded in the marketplace. By setting the expiration for the Saturday, the market allows for final settlements and calculations to occur after the last trading day, which is often the third Friday of the month. This structure creates a consistent framework across the options market, ensuring that traders and investors know when their options will cease to function as trading instruments. The emphasis on this specific time frame helps in managing the logistics of option trading and settlement processes. Having a clear expiration schedule also aids traders in effectively strategizing their trades, knowing when they need to take action or close positions.