FMAN

FMAN refers to one of three regular option cycles, representing the months of February, May, August, and November. Option cycles refer to a pattern of months in which option contracts expire. 

FMAN is one expiration cycle. The others are JAJO (January, April, July, and October) and MJSD (March, June, September, and December). 

The expiry date is typically the third Friday of the expiry month. That third Friday is the last day traders can exercise the option. If the third Friday falls on a holiday, then the expiration date is the Thursday prior to the usual Friday expiry.

Options have a limited life, meaning they cease to exist beyond the expiration date. Traders holding the option have until expiry to either exercise the option or close the trade by taking an offsetting position to realize any profit or loss.

Exercising refers to taking the associated position in the underlying asset. For example, when a call option expires the call buyer has the choice of letting the option expire worthless and forfeiting the premium paid, or, exercising the option and thus buying the underlying asset at the strike price specified by the options contract. Prior to expiration, they can sell the option for any intrinsic value and time value it may have.

An option writer, or the seller of the option, receives the premium when the option is bought by the buyer. If the option expires worthless, then the seller keeps the whole premium. If the option expires in-the-money, the seller is obliged to provide the underlying shares to the option buyer at the strike price. The option writer may also close out the position at any time by taking an offsetting position prior to expiry, thus realizing either a loss or a partial gain on the premium received.

Brokers may automatically exercise in-the-money options at expiry on behalf of the option buyer. Traders can request that options are not automatically exercised. For example, the trader may not have the capital to buy the underlying stock. In this case, they may not want to be exercised, but they should close out the option position prior to expiration to lock in any gains they are entitled to (the difference between the current option price and the purchase price).

Options that are out-of-the-money are not automatically exercised and are allowed to expire worthless. Even though the option is technically worthless, the option holder may contact the broker requesting the option be exercised (if desired). This may be worthwhile if the option is near-the-money and the underlying stock has limited liquidity. In this case, the option allows the trader to take a position in the underlying for the position size associated with the options (typically 100 shares each).