Do Options Trade Pre-market Or After-hours?


Do Options Trade Pre-market Or After-hours?

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Since 1991, the New York Stock Exchange and then the National Association of Securities Dealers Automated Quotation gradually opened up to pre and after-hours trading, also known as pre-market and extended-hours. Today, NYSE and NASDAQ allow pre-market trades from 4 a.m. to 9:30 a.m., the regular stock market between 9:30 a.m. and 4 p.m., and after-hours trading from 4 p.m. to 8:00 p.m. (all times in ET).

But what about options? Do they trade during pre-market or after-hours as well? 

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Options don’t trade during pre-market or after-hours on NYSE or NASDAQ, as neither of the two major stock exchanges permits pre-market or after-hours options trading. However, traders and investors can deal in options beyond the regular market hours through the Chicago Board Options Exchange and its parent company CBOE Global Markets.

NYSE American, formerly the American Stock Exchange (AMEX), allows premarket trades from 6:30 a.m. to 9:30 a.m. ET. However, this window excludes options. Boston Options Exchange has the same trading window and options trading policy as NYSE and NASDAQ.

What Options Can You Trade Pre-market Through CBOE?

The Chicago Board Options Exchange and CBOE Global Markets operate 4 options exchanges: C1, C2, BZX, and EDGX. 

All these exchanges support pre-market and extended-hours trading in options. Also, CBOE operates 7 equities exchanges, 1 future exchange, and 1 forex marketplace.

CBOE C1 accepts global trading orders for SPX and VIX options between 2 a.m. and 3 a.m. ET. The global trading hours for the two options are from 3 a.m. to 9:15 a.m. ET. 

Core trading orders are accepted between 7:30 a.m. and 9:30 a.m. ET. The core trading session is the usual 9:30 a.m. to 4 p.m., the regular hours similar to that of NYSE and NASDAQ.

CBOE C2, BZX, and EDGX options exchanges have a shorter trading period. Accepting global and core trading orders begins at 7:30 a.m. and ends at 9:30 a.m. ET. 

The global trading period for DJX and XSP options is from 8:30 a.m. to 9:15 a.m. ET. The core trading session is the usual 9:30 a.m. to 4 p.m.

Investors and traders can deal in SPX, XSP, VIX, and DJX options through CBOE during the respective pre-market hours. SPX is based on the S&P index. XSP is a mini-SPX index option. VIX is CBOE’s volatility index. DJX is CBOE’s options based on the Dow Jones Industrial Average.

Both NYSE and NASDAQ have an extended 15 minutes after the regular hours for a few select options trading. CBOE taps into the same market too. 

Investors and traders can deal in those options from 4 p.m. to 4:15 p.m., ET, on weekdays/non-holidays through CBOE, NYSE, NASDAQ, other brokerage firms, or asset management companies.

Which Options Can You Trade After-Hours?

All options are derivatives, a type of financial instrument based on the value of an underlying asset, such as stocks. 

Since the regular trading hours for stocks are from 9:30 a.m. to 4 p.m. ET, on Mondays through Fridays, the same window applies to options as well, but for a few exceptions. However, you can trade FX options anytime, taking advantage of all the time zones around the world.

Courtesy ECNs, asset management companies, and brokerage firms, investors can now trade stocks nearly 24×5. The same flexibility is not available for options yet. However, there are some options you may trade after the closing bell, but the window is limited to an additional 15 minutes only.

NYSE electronic securities exchanges Arca and American have around 40 options you can trade for 15 minutes after regular hours, in effect from 4 p.m. to 4:15 p.m. ET, Monday through Friday. NASDAQ lists have a couple more options. However, a vast majority of the options appear on all three lists. 

The NYSE Arca and American options you can trade during this short extended period include the popular AMJ, QQQ, SPY, and IWM, among others. AMJ is an option based on the JP Morgan Alerian MLP Index ETN. SPY options SPDR S&P 500 ETF. 

Invesco QQQ Trust trades in NASDAQ-100. IWM is based on iShares Russell 2000 that consolidates small-caps.

AMJ is available through NYSE. IWM, QQQ, and SPY are listed by both NYSE and NASDAQ. All the lists, each comprising more than 40 options, offer diverse opportunities for traders and investors. 

There are also commodities-based options such as GLD, DBA, UNG, DBB, DBC, and DBO. DIA based on SPDR Dow Jones Industrial Average is available on NYSE, NASDAQ, and other exchanges.

You may trade call or put index fund options like EEM, ETF options like EFA, and midcap trusts like MDY. During the extended 15 minutes every weekday, other options include short-term and midterm futures like VIXM and VIXY, Barclays’ ETN based VXZ, and S&P Homebuilders ETF-derived XLB.

You will find the complete list of these options for NYSE here. The Late Close Exceptions has a downloadable excel file with lists of both Arca and American after-hours options. You can refer to the complete NASDAQ list here.

Trade Options 24×5 With CBOE

In April 2021, CBOE announced its intention to extend the global trading hours for some of its options, especially SPX and VIX. The plan was to operate a 24-hour trading window. 

In June, the company issued a press release to announce extending the trading window to almost 24 hours with effect from November 21, 2021.

Traders and investors must note that CBOE trading hours are applicable only for their flagship products. SPX is CBOE’s S&P index-based option, which is different from SPY. 

The more popular SPY is derived from S&P index-based ETFs. Likewise, CBOE’s VIX is its volatility index based on the S&P 500.

CBOE extending its trading hours or offering a nearly 24-hour window for traders worldwide does not necessarily mean the entire options market will open up for such premarket and much longer extended hours operations. 

Neither NYSE nor NASDAQ or any of the other large exchanges around the world has expressed any intention of reviewing their stand on options trading hours.

Final Thoughts

Any premarket options trade involves all the typical risks of the market. There are a few added risks associated with speculative hedging. 

Young investors or beginners, in particular, must exercise caution while participating in ambitious premarket or aftermarket options trading.

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