At what time of day does an option officially expire?
- Thread starter bmoney
- Start date
Depends on the option. If it's cash-settled, the cut-off is 4:00 PM EST/EDT IF it's a PM settlement. If it's physical delivery, the exercise cut-off time is as follows from the OIC:
https://www.optionseducation.org/re...s have a cut,order to meet exchange deadlines.
The OCC must be notified by 530pm et. As @ajacobson mentioned, most brokers will have an earlier cutoff time to meet this deadline. For example my firms cutoff time is 515pm et with best efforts after that.
I think we discussed this once before. I know that they once expired on Saturday, but that had changed a while ago. Everything I have now read says the expire at 11:59pm on Friday, and brokers are notified of the results before this time. I also receive my notices around 130am ct Sat morning. I have even emailed the OCC twice and asked for clarification and they have sent me the exact same email back each time saying they technically expire at the 1159pm time Friday.
I have seen in their by laws about still exercising after the deadline in certain unusual circumstances and paying a big fine (which would seem to suggest a later "death", but other than that I haven't seen anything about a Saturday "death".
I know you know what your are talking about, so if you have any current link that shows the Saturday evening time, I would love to see it. This seems to be something the people disagree on and I would love to know for sure.
@ajacobson
I just emailed the OCC again with this question. Here is their response
"Thank you for contacting OCC. Technically, all options, whether they be monthly or weekly contracts, expire now at 11:59 ET on the day of their expiration, typically a Friday............................
OCC looks to process this information by 10:00 pm EST. You will want to speak to your broker regarding their policy of informing their customers of an assignment.
I hope that this helps.
Regards,"
Again, I know you are extremely knowledgeable in options trading. If you have any information that this is not correct, it would be great if you could post.
I think the more complete answer is that an option expires at 1159 pm on expiration day. It will be auto assigned based on the closing price of the underlying compared to the strike price with 0.01 ITM initiating an auto assignment. If the buyer wishes to change what the auto assignment would normally do, he has until the earlier of 530ET or whenever his broker allows his request which is always earlier than 530 to allow time for the broker to meet the 530 deadline to initiate the change from or to assignment.
At what time is the closing price for settlement determined? 530ET?