Last Friday I traded some VXX puts after the market close(trades like 15 min from 4-4.15pm). They were out of money by 4.15, so didn't bother to close. Come Monday and my puts were exercised, luckily i had enough to cover. Turns out the settlement value of those options is determined by the closing price at 4pm and not what happens from 4-4.15. Does anyone know if this also applies to Etf's like spy,uvxy etc.
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VXX Afterhour Options
- Thread starter rber
- Start date
If you are long VXX options, you have until 530pm et to exercise that option on expiration day. (Different brokers may have earlier cut off times in order to give themselves time to process the trade). With the VXX, things can happen that effect the VXX price after the option market closes at 415et.
For example, say you are long the 48 puts on expiration Friday. At 415et, when the option market closes, they are trading near zero and the index is at 48.5. Remember VXX is still trading after hours. VXX starts to drop as the news comes out, stock futures move, etc. The holder of the put is able to buy VXX after hours for 47.5. He could then exercise his long puts and sell VXX for 48 (the strike price).
The 4pm closing price determines whether an option will be auto exercised. In the above example, the 48 put would not be auto exercised as the VXX closed at 48.5, but the holder of the option still has the right to exercise it.
For example, say you are long the 48 puts on expiration Friday. At 415et, when the option market closes, they are trading near zero and the index is at 48.5. Remember VXX is still trading after hours. VXX starts to drop as the news comes out, stock futures move, etc. The holder of the put is able to buy VXX after hours for 47.5. He could then exercise his long puts and sell VXX for 48 (the strike price).
The 4pm closing price determines whether an option will be auto exercised. In the above example, the 48 put would not be auto exercised as the VXX closed at 48.5, but the holder of the option still has the right to exercise it.
If you are long VXX options, you have until 530pm et to exercise that option on expiration day. (Different brokers may have earlier cut off times in order to give themselves time to process the trade). With the VXX, things can happen that effect the VXX price after the option market closes at 415et.
For example, say you are long the 48 puts on expiration Friday. At 415et, when the option market closes, they are trading near zero and the index is at 48.5. Remember VXX is still trading after hours. VXX starts to drop as the news comes out, stock futures move, etc. The holder of the put is able to buy VXX after hours for 47.5. He could then exercise his long puts and sell VXX for 48 (the strike price).
The 4pm closing price determines whether an option will be auto exercised. In the above example, the 48 put would not be auto exercised as the VXX closed at 48.5, but the holder of the option still has the right to exercise it.
But the likelihood of that put being exercised is not high though as the holder would still lose with the premium that he's paid that's not going to be covered by the profit he's made by exercising the put UNLESS the drop is HUGE like the one on SVXY or XIV on Feb. 5, then yeah if you can't trade the option anymore, it's worthwhile to exercise the option to lock in the huge profit.
reading the prospectus should be your #1 goal.Last Friday I traded some VXX puts after the market close(trades like 15 min from 4-4.15pm). They were out of money by 4.15, so didn't bother to close. Come Monday and my puts were exercised, luckily i had enough to cover. Turns out the settlement value of those options is determined by the closing price at 4pm and not what happens from 4-4.15. Does anyone know if this also applies to Etf's like spy,uvxy etc.