Last updated on March 11th, 2022 , 08:51 am
Not all options stop trading at 4 pm Eastern. In fact, there are quite a few ETFs, ETNs and indices that trade in the after hours up until 4:15 pm Eastern.
Knowing the exact moment a product stops trading is crucial to investors. Why? The reason can be summed up in two words: pin risk.
Pin risk occurs when there is uncertainty as to whether or not an option will expire in the money.
Highlights
- There are over 40 products that currently trade options in the after hours markets
- Pin risk occurs when an option is trading close to being in-the-money as expiration nears
- A few indices trade that normally trade until 4:15 stop at 4 sharp on expiration day
- After 4pm, the liquidity for many products dries up
Pin Risk Example
Let’s say we are short a call spread on Invesco’s QQQ. Here is our position:
- Short 350 Call
- Long 355 Call
We are going to assume that it is presently expiration day and the closing bell is going to ring in 3 minutes.
We check the QQQ’s and see they are trading at $349.25. It’s close, but there is still a little risk of assignment on our short 350 call.
A few more minutes pass, and the bell rings. The last print on the QQQ’s was $349.60 at 4 pm Eastern.
We have nothing to worry about, right?
No! Why? Options in this particular ETF trade until 4:15 Eastern time!
If the QQQ’s rally during this time (which isn’t uncommon, especially on “triple witching” days), we are in serious trouble.
In addition to this risk, option traders can even get assigned in the after hours market even when the underlying security is no longer trading. Let’s see why next.
Options Can Be Assigned up Until 4:30 Eastern.
ETF and stock options can be assigned up until 4:30 Eastern time. What does this mean?
If the stock moves against your short option during this time, the long party still has the right to exercise their option. It is therefore wise to trade out of short option position before the options stop trading. You can read more about this on our article, “The Dangers of After Hours Options Assignment”.
Product's That Trade Until 4:15 pm Eastern
So how do we know when our options stop trading? There is no method, only a list. You can find this list below, which was compiled from the NYSE’s “late close” list as well as tastyworks. Please note that products are constantly being added and removed from this list.
The below products that comprise the list are either exchange-traded notes (ETNs), exchange-traded funds (ETFs) or indices.
- AUM
- AUX
- BACD
- BPX
- BRB
- BSZ
- BVZ
- CDD
- CITD
- DBA
- DBB
- DBC
- DBO
- DBS
- DIA
- EEM
- EFA
- EUI
- XEO
- EUU
- GAZ
- GBP
- GSSD
- IWM
- IWN
- IWO
- IWV
- JJC
- JPMD
- KBE
- KRE
- MDY
- MLPN
- MNX
- MOO
- MSTD
- NDO
- RUT
- OEX
- NZD
- OEF
- OIL
- PZO
- QQQ
- RVX
- SFC
- SKA
- SLX
- SPY
- SPX
- SPX (PM)
- SVXY
- UNG
- UUP
- UVXY
- VIIX
- VIX
- VIXM
- VIXY
- VXEEM
- VXST
- VXX
- VXZ
- XHB
- XLB
- XLE
- XLF
- XLI
- XLK
- XLP
- XLU
- XLV
- XLY
- XME
- XRT
- XSP
- XSP (AM Expiration)
- YUK
Indices That Trade Until 4:15 pm Except Expiration
The below indices trade until 4:15 pm except on the most important day of all: expiration. On expiration, the below cash-settled indices stop trading at 4pm Eastern.
- NDX (weeklys)
- RUT (weeklys)
- SPX (weeklys)
- OEX
- XEO
Dangers of Trading in Extended Markets
I would highly recommend options traders to exit all expiring option positions before 4pm Eastern on expiration day. Why?
Market liquidity generally dries up after the official bell.
I remember one day I had an advisor call me at 3:05 Central (after the bell). The market rallied, and I was forced to trade out of 20k IWM call spreads in an insanely illiquid market. Just the thought of our fill prices that day still makes me sick to my stomach! But at least the market makers were able to order a double-porterhouse at Gibson’s that night.
Happy trading!
