Options trading can be a profitable way to invest your money, but it’s important to know when options trade. Options trading hours can vary depending on the type of option and the exchange it’s traded on. In this article, we’ll discuss when options trade and what you need to know to get started.
What Are Options?
Before we dive into when options trade, let’s first define what options are. Options are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price and time. The underlying asset can be a stock, index, currency, or commodity. Options can be used for speculation, hedging, or income generation.
When Do Options Trade?
Options trade during regular market hours, which are from 9:30 a.m. to 4:00 p.m. Eastern Time (ET) in the United States. However, options on some exchanges, such as the CBOE, trade until 4:15 p.m. ET. It’s important to note that not all options trade during regular market hours. Some options, such as binary options, trade 24/7.
Types of Options
There are two types of options: call options and put options. Call options give the buyer the right to buy an underlying asset at a specific price and time, while put options give the buyer the right to sell an underlying asset at a specific price and time. Options can also be American-style, which means they can be exercised at any time before expiration, or European-style, which means they can only be exercised on the expiration date.
Options have expiration dates, which means they expire on a specific date. The expiration date can be weekly, monthly, or quarterly, depending on the option. It’s important to note that options expire on the third Friday of the expiration month. If the third Friday is a holiday, the expiration date is moved to the Thursday before.
Option chains are lists of all the available options for a particular underlying asset. Option chains can be found on most trading platforms and show the strike prices, expiration dates, and premiums for each option. It’s important to review the option chain before entering an options trade to ensure you understand the risks and potential rewards.
Options trading can be a great way to invest your money, but it’s important to know when options trade. Options trade during regular market hours, but not all options trade during those hours. It’s important to understand the types of options, expiration dates, and option chains before entering an options trade. With the right knowledge and strategy, options trading can be a profitable venture.