Back in the time when dinosaurs still roamed the earth, I was still day trading and still using a traditional broker I had to call in order to place a trade. Although I rarely held a trade overnight, I'd had a comfortable cushion as trading ended the previous day and I thought the momentum stock I was chasing still had room to run. By the next morning's open, however, I wasn't feeling comfortable about the way the charts were setting up. With a profit still intact, I called my traditional broker--not the broker I use now--and told him I wanted to sell to close my 20 or 30 or 40 contracts, however much it was I had at the time.
He wouldn't place the order.
It was too early, he said. Options trading didn't begin until fifteen minutes after the U.S. equities opened, he said. He'd place the trade then, he said.
By the time fifteen minutes had expired, there was no profit left and, instead, I had a big loss. Was that broker right? By now, those of us used to handling our own trades on online platforms know that he wasn't right, but when, exactly, do options trade?
The answer differs according to the type of options. At the outset of this article, I have to note that some times will be Central Standard Time (CST) and some, Eastern Standard Time. This is because specification sheets will be quoted. Different sources use different time zones.
Options on broad-based indices trade from 8:30 am until 3:15 pm CST. This information can be located on the "Product Specification" page of the CBOE for each broad-based index, such as the OEX, for example. That's why, when you place an OEX or SPX option order immediately after the end-of-day bell rings on CNBC, your online brokerage likely warns you that you're placing an order for an option that trades beyond normal market hours. A broad-based index is, by definition, an index that is designed to mimic the action of an entire market. The Dow, SPX, RUT, and OEX are examples of broad-based indices. For tax treatment purposes, there's a more specific definition of broad-based indices, including conditions about how much sway a single component stock can have over the index's value, but this definition suffices for our purposes.
However, there's a little quirk here. That quirk involves some of the lesser-known variations of options on these broad-based indices. Earlier this year, the CBOE announced plans (IC09-120) to change "the close of trading hours from 3:15 p.m. (Chicago time) on the last day of trading only in expiring Quarterly Index Expirations on broad-based indexes (i.e.; SPX, XSP, and XEO). All non-expiring Quarterly Index Expirations will continue to trade until 3:15 p.m."
Options on Index FLEX Products, the CBOE says, also differ. They trade from 8:45 a.m. - 3:15 p.m. CST.
Options on narrow, sector-based options have different hours. For example, the XAU, BKX, SOX, and UTY are all examples of PHLX sector-based indices. Product specification pages for these all list 9:30 a.m. to 4:00 p.m. EST hours of trading.
Equity options, the type I was trading that day long, long ago, trade from 8:30 a.m. - 3:00 p.m. CST on the CBOE. There may be a slight caveat. Stock openings may be rolled out, so that not all equities begin trading at the same instant. Therefore, there may be a momentary lapse before options begin actively trading on a particular underlying, but there's no 8:45 a.m. CST opening of equity options trading, as my then-broker tried to assure me.
Since those long-ago times when I was calling my traditional broker to place orders, ETFs have come into their own. When do these options trade? According to the Options Industry Council, "ETF options will trade the same hours as the underlying ETF. For most ETFs, this is 9:30 a.m. to 4:00 p.m., Eastern Time. For certain broad based ETFs, 9:30 a.m. to 4:15 p.m. Eastern Time."
What about U.S. Dollar Cash-Settled Currency Options? The Options Industry Council advises that, for the PHLX, those hours are 9:30 a.m. to 4:00 p.m. EST.
In conclusion, the majority of options trade from 8:30 a.m. - 3:00 p.m. CST or 9:30 a.m. - 4:00 p.m. EST, with broad-based index options being the most prevalent exception. However, if you have a question about the trading hours for the options you're trading, the OIC or Options Industry Council (www.888options.com or www.optionseducation.org) may be the most comprehensive source for information. Under "Tools & Literature" on the home page, you'll find "Product Specifications," and then can search for the option products that interest you. On the product specification pages, you'll also find the exchanges that offer those options that you're researching and you can verify trading hours through those exchanges, too.