Deepen your understanding of weekly trading options with the information below. Some topics covered in this material include distinguishing weekly options from standard options, the last trading day, how they settle and how to find which weekly options are trading. When you are ready, open your personal trading account at Firstrade to begin investing.
Do some exchanges trade options series that expire weekly?
Yes. Exchanges call these "weekly options series" or "Weeklys”. In addition to previously listed index weekly options series, the exchanges participate in an approved program that allows trading in some equity and ETF weekly options. Weekly option series are listed on a Thursday and, in most cases, expire the following Friday. Each exchange can list weekly options series on a limited number of classes. Become fully familiar with the contract specifications of any option product you trade by visiting the exchange website where that contract trades.
OCC publishes this list of newly added and newly delisted Weekly Option Products that have been processed through OCC's internal series listing application. These series are in the weekly program for the next eligible weekly options expiration.
Do exchanges list weekly options every week?
Weekly option series are listed each Thursday and expire the following Friday, except for those instances when the following Friday is a standard Expiration Friday (the third Friday of the month) or a quarterly expiration. If the following Friday is an OCC holiday, the weekly option series expires on the Thursday preceding the holiday.
The exchanges do not list new weekly options that expire during the expiration week for standard options (the third Friday of each month). In other words, the exchanges do not list new weekly options on the second Thursday of a month and do not trade weekly options during the following standard expiration week until new series gets listed on expiration Thursday.
What is the last trading day for equity and ETF weekly options? How do they settle?
Weekly options on equity and ETFs are physically settled and have an American-style exercise feature. The last day of trading for equity and ETF weekly options is Friday.
What is the last trading day for index weekly options? How do they settle?
You can find information specific to each index weekly product by going to the website of the exchange that trades that product. View the contract specifications. Most are cash settled, but their contract specifications vary. Ensure you are fully familiar with their terms. Some may have a last trading day of Thursday and be a.m. settled. Others may have a last trading day of Friday and be p.m. settled. Exercise styles may also vary. For more information, contact your brokerage firm or 1-888-OPTIONS.
How can I distinguish weekly options from the standard options?
Refer to the explicit numerical calendar day of expiration in any contract you trade, since the option symbols include the expiration date. Data vendors display this data in different formats. Ultimately, entering correct order information for the specific call or put you want to trade is your responsibility. If you have any doubt about the product you are trading, the expiration date, the symbology key (if needed) or any other data you're entering, check with your brokerage firm before placing your order.
Will there be more weekly options in the future?
It is possible since the current program allows each exchange to list only a limited number of weekly options series in addition to those listed by other exchanges.
Are weekly options subject to OCC's exercise-by-exception processing procedures?
Yes, as between OCC and its clearing members, weekly options series are subject to exercise-by-exception processing procedures at expiration. Understand your broker's requirements and procedures for the submission of exercise instructions for weekly options and any other option contract you trade. Also, note that weekly equity and ETF options are American-style exercise. This means they can be exercised on any business day prior to expiration.
How can I find which weekly options are trading?
Because weekly open interest expires every week, the exchanges have the ability to list different products from week to week. Although this practice has not been frequent, check with your brokerage firm or the exchange websites, or call 1-888-OPTIONS for currently available products.
Can you explain why some securities have several expirations available over four to five weeks?
In the last quarter of 2012, the options exchanges received regulatory approval for extended weekly expirations. The options exchanges can now list up to five consecutive weekly expirations for selected securities. Although any product with weekly expirations can be part of the extended weekly program, the exchanges will typically select the most actively traded options.
If the regular monthly expiration is three weeks away, then options investors would most likely see weekly, weekly, monthly, weekly and weekly expirations listed over a five-week period. As you can see, no new weekly options are listed that would expire during the expiration week for regular monthly options, which is typically the third Friday of each month, nor would they be listed if they would expire on the same week as a quarterly option on the same underlying.
© 2020 The Options Industry Council. All Rights Reserved. Visit us online at www.optionseducation.org