For new option traders, they normally think expiration date = last trading date(time). This is a very common mistake which may lead to huge losses.
Expiration date means on which date options expire, and last trading date(time) means before which date options are able to traded. For regular options, expiration date is the third Saturday of each month, and last trading time is 4:00pm ET of the third Friday of each month. Even with weekly options that expire on Friday, they will expire after after-hour trading time.
Keeping these concepts in mind, you will soon realize that there is a gap between expiration time and last trading time! And you don’t have to be super smart to figure out that you are exposed to risk you don’t have control.
Let’s have an example. Say you sold 10 TSLA “13 Dec 13 (W) 136.00″ call for 4.8 per contract. The stock closed at 135.99 on 13 Dec. 4:00pm ET. You are so happy that you can keep all the premium in your pocket and plan to fly to Vegas on weekends to continue your luck. Then you suddenly get a margin call to ask you deposit 140,000 to your account on Monday. WTF?! What happened last Friday was during after-hour time, TSLA jump to 140.00 and the call option you sold become ITM and got assigned to you. This is not a big move considering how volatile TSLA is.
Nobody want to be in such a poor position and any surprises like this. So my suggestion to retailer trader is always close out your option position before last trade time even though you will lose a penny or so exiting your positions if you don’t really want to exercise your option.
Here is a reference link to check out option expiration dates of 2013.
Good luck and have fun!