I am a neophyte and was unable to uncover the closing time of the exchange. Do ALL options (stock, ETF, futures) close that the same time? Kind regards,
equity options: 3pm CT Cash settled index options: 3:15pm CT Same as all the other exchange except there are the only ones with cash settled index options.
And your broker might consider 4:00 PM EST the cut-of time for all options - including QQQ and SPY options which trade to 4:15 PM EST. BMO Investorline will cancel unfilled QQQ/SPY option orders at 4:00 PM EST - no big deal though.
To clarify/extend that a bit, cash settled pm-close index options close at 3pm CT on the day they expire. For example the weekly S&P 500 options stop trading on Friday at 3pm CT and settle based on the 3 pm CT S&P 500 index level.
With the exception of OEX and XEO which continue to trade until 315ct on expiration day (except for XEO quarterlies)
That's very interesting, I never noticed that before. I dug into the spec and while the S&P 500 PM settles are based on "the official closing price of the S&P 500 Index as reported by Standard & Poor's", OEX and XEO are based on "the last (closing) reported sales price in the primary market of each component stock" and OEX and XEO trade for 15 min after the close. Anyone know why the difference, and what happens between 3:00 and 3:15 in these two? One would think the close price would be known at 3:00 so there wouldn't be any trading in those last 15 min except for Interactive Brokers auto-liquidating their customers positions for no good reason, but clearly there is something going on to make it different from the S&P 500?
Actually all of these products expiring options used to trade until 315ct. The change was made a couple of years ago to the SPX weeklies and the XEO quarterlies, which in my opinion is a mistake. Although the SPX weekly settlement is based on the closing price of the underlying components, it continues to tick, (today until about 310ct). If you have a position in one of these options, you can't trade out of this risk after 300ct, even though your options are moving. Also consider you are long a time spread. Your front month is expiring to cash, so you are now long the back month. Do to margin issues, you may not be able to sell your long options, because you would be left only with the front month short. You also couldn't sell it as a spread after 300 even though your back month options would continue to move and trade until 315.
Good point on the calendar spreads, I don't trade those so hadn't thought about it. I guess the question is why the SPX weeklies close at 3:00 then.
I think the main reason is to protect the DPM/market maker. They were having difficulty shifting their pricing programs to reflect parity at 3:00 which resulted in them being picked off by buying or selling under parity.