The expiration date is the date by which the holder of an options contract must exercise their right to buy or sell the underlying asset at the strike price.

For example, imagine you buy a put option on Company XYZ with a strike price of $50 and an expiration date of one month from now. This means that you have the right to sell 100 shares of Company XYZ at $50 per share within the next month. If the price of Company XYZ shares drops below $50 before the option expires, you can exercise the option and sell the shares at the higher strike price, then buy them on the open market for a profit. However, if the price of Company XYZ shares does not drop below $50 or increases, you may choose not to exercise the option and only lose the premium (cost) paid for the option. It is important to note that options contracts expire, and if the holder does not exercise their right before the expiration date, the option becomes worthless. Therefore, traders must carefully consider the expiration date when buying or selling options contracts.