Do Options Trade After Hours? No… With A Few Exceptions
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A common motion many fresh traders have is do options trade after hours ?
The shortstop answer is, with a few noteworthy exceptions, no .
But to truly address the question, we have to first determine what “ after hours ” means .
Stocks and options are traded in a marketplace called an substitute .
There are diverse exchanges across the earth, each with their own set of trade hours, but by and large conforming to three “ major ” sets of deal hours, referred to as a “ trade school term ” : US/Americas, Europe and Asia .
US/Americas exchanges are from 9:30am – 4:00pm US easterly time
trade is traditionally Monday through Friday within these hours, meaning that there are only two hours during the weekday where trade is by and large not done : 8:30am – 9:30am and 4:00pm – 5:00pm .
It is authoritative to note that sealed exchanges may be closed for all or part of a normal trade session based on holidays ( and Asian exchanges often close during their lunch hours ) .
In order to trade at an exchange, you have to go through a broke or brokerage house fast .
The hours that are “ during commercialize ” will be dependent upon the broker and the exchange to which they connect you .
All times outside those specific hours, whether they come before the capable or after the close are considered “ after hours ” .
While some exchanges may allow you to trade securities after hours, trade of options is closed .
As mentioned earlier, there are a few noteworthy exceptions : ETFs ( exchange traded funds ) such as SPY and QQQ are the most common examples in the US/Americas exchanges .
They are frequently traded for an extra 15 minutes after the close bell, but are settled ( at exhalation ) based off the price of the underlying at the cheeseparing .
( notice that options on their passing day may stop trade with the normal trade session. )
What Are The Risks Of Holding Options Through Expiration?
possibly, rather than simply, “ Do options trade after hours ? ”, a more apposite doubt would be : “ Are there any risks holding options through termination ? ”
And the answer, slightly surprisingly, is yes .
As an options trader, you buy and/or sell options on an underlie in the hopes that it will move in your hope management by termination .
If you hold your options through termination, you run the gamble of automatic pistol exercise or appointment .
In and of itself, this seems fairly straightforward : if your choice is in-the-money ( ITM ) at termination with an option you bought, it makes feel that you ’ five hundred want to exercise that option to gain the benefit of being ITM .
alike, if you sold an choice and it expired ITM, you ’ vitamin d expect to get assigned .
however, this international relations and security network ’ triiodothyronine always the case .
As we ’ ve discussed, trade of options stops with the convention deal school term, but it ’ s still oftentimes possible to trade the underlying securities well after the close bell.
This can cause unexpected behavior, because the trade for options ends before they actually expire .
Ignoring any weekly or intraweek options, “ standard ” ( monthly ) options expire the third Friday of the month – though technically, this is inaccurate .
They stop trading the third gear Friday of the calendar month, but they actually expire noon the succeed day .
Because it ’ s potential to still trade securities after the market closes for options, there is a hazard that the security will trade through the strike, making an choice that closed ITM abruptly out-of-the-money ( OTM ), or vice-versa .
This could result in unexpected assignment, or the lack of an expect assignment .
In most cases, the moves after hours are not adequate to change the expect behavior .
however, be aware – particularly if you are short circuit ( have sold ) any options – you may be assigned the security even though the option was OTM when you end were able to trade it .
The more volatile the act of the fundamental and the closer the price is to your hit at the close bell, the greater the chance of a “ surprise ” consequence .
consequently, to avoid any surprises, it is best practice to close any positions with PRIOR to the completion bell of the stopping point trade day before passing .
sol, do options trade after hours ?
In a son, no .
however, that doesn ’ thyroxine hateful that you need entirely concern yourself with the prices of the underlying between the opening and close bells .
binary events, such as earnings announcements or other newsworthiness reports, much happen after trade has closed for the day on options .
many of you may trade options specifically around those events in order to try to capitalize on such movements when options aren ’ metric ton being traded .
But specifically, as it relates to the passing, you need to be mindful of what the potential risks are – and if you ’ re not comfortable with them, be surely to close/exit the position before the closure chime on exhalation day .
Trade safe !
disclaimer : The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be desirable for investors who are not conversant with exchange traded options. Any readers matter to in this strategy should do their own research and search advice from a accredited fiscal adviser .
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Read more: A Brief History of Exchange-Traded Funds
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