SPY Options: Wednesday Expiration Dates

Published on: Sep 13 2016 by John Critchley

 

By: John J Critchley, Jr

SogoTrade Senior Option Specialist/Option Principal

The SPY ETF (S&P 500) has just recently begun listing options that expire on Wednesdays.  This is in addition to the weekly options that expire every Friday, the regular monthly expiration options (the third Friday of every month) and the Quarterly options that expire on the final trading day of every quarter. ( March, June , September and December )

We strongly encourage our customers to be extra careful when selecting an option expiration date and to confirm before entering the order that the correct expiry was chosen to trade.

The expiration date of an option is clearly noted on the Option Chain page, the Trade Page, the Order Ticket window and the Positions pages.  All Weekly options, including both the Friday and Wednesday expirations are noted by a ‘W’. The Quarterly expirations are noted by a ‘Q’ and the standard monthly expirations just denote the month in which they expire.

 

The expanded number of expiration dates  for the  SPY options have led some to ponder when will this continued expansion of expiration cycles choices end. Will the day come when there are daily expirations?  We shall see, but in the meantime, with the increased number of expiration dates within option classes, it is imperative to confirm the correct expiration date for the option you decide to trade.

Here is a summary of SogoTrade’ s expiration day policies:

 

Options Exercise Policy:

 

Clients that wish to exercise any long option contract (In-The-Money or Out-The Money) will pay the full aggregate strike price provided by the option contract. We will accept exercise instructions Monday thru Thursday until 5:00 PM ET for index option contracts and/or equity option contracts.

 

To exercise an option, please contact us at (646) 885-6486 with your instructions.

 

There is a $15.00 charge for exercises and assignments.

 

 

Automatic Exercises:

 

 

All expiring equity and index options that are at least $0.01 In-The-Money (ITM) will be eligible for automatic exercise at expiration (after market close on the third Friday of the corresponding month). 

  

For short option positions, you have no control over assignment. The only way to avoid assignment is to trade out of the position before the expiration of that contract.

  

 Our associates may need to contact you for further instructions.  If we are unable to reach you and/or the account does not have enough equity to cover the exercise the option may NOT be automatically exercised.  If an option is auto exercised without enough equity in the account an immediate sellout may occur and a $75 fee may be charged.

 

Please see the OCC’s expiration calendar at:

http://www.optionsclearing.com/publications/xcal/xcal.jsp 

 

 

 

 Expiration day Choices:

 

 

 

It is very important if you have positions that are ITM that you keep a close eye on these positions and understand what your choices are for these options on Expiration Day:

 

Choices:

         You can proactively close the option position. In order to avoid a possible  margin call for an exercised or assigned position(s) that would exceed your buying power after expiration, you should take market  action by Expiration Day 3PM  ET to close out that position. 

 

  • You can decide to keep the position open if you have adequate buying power available to take possession of the resultant long or short underlying position.

  

  • You also can submit a Do Not Exercise (DNE) instruction on any of your in-the- money options. Do Not Exercise Instructions:

 

Do Not Exercise Instructions:

 

In order to prevent the automatic exercise of an option that is In-the-Money, please contact customer support at (646) 885- 6486 and provide your instructions.  Please note that Do Not Exercise instruction can only be accepted on expiration date.

 

 

 SogoTrade may close position on your behalf

 

During expiration days, SogoTrade closely monitors all expiring option positions.  If you do not manage the expiration risk in your account prior to 3 PM ET, SogoTrade reserves the right to buy, sell, or otherwise close positions to manage the risk in your account

 

Failure to close out these positions could result in SogoTrade taking market action on your behalf to reduce margin risk.

Actions Include:

-SogoTrade may close out the position on your behalf

- SogoTrade may enter a Do Not Exercise (DNE) instruction.

- SogoTrade may initiate closing stock trades in the after-hours market to cover any resultant position.

 

Usually we will allow a client to take action in their own account by 12:00 PM ET if we are alerted in a timely fashion.

If SogoTrade has to take action above the normal course of action, we may charge a maximum $75 options management mitigation fee.


 

 

 

Options Assignment Policy:

 

We allocate the assignment of exercise notices among short positions according to an automated procedure. This procedure randomly selects from among all short option positions (including positions established on the date of assignment) those contracts are subject to exercise. All American-style short option positions are liable for assignment at any time. The assignment process may result in multiple partial assignments and/or multiple transactions to fulfill a single assignment, and a separate commission charge will apply to each partial assignment or transaction needed to complete an assignment.

 

 

Exercise and Assignment Fee:

 

There is a $15.00 charge for exercises and assignments.

 

 

Stay tuned…..

 

 

 

Disclaimer


We are not liable for any trading decisions made by any reader. NO advice is given or implied. The information offered in this article is for demonstration purposes ONLY and should not to be either construed as an offer or considered to be a recommendation to buy or sell any options.

Your use of this information is entirely at your own risk. It is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with a professional broker, or financial planner, and make your own independent decisions regarding any trades mentioned herein. This is not a solicitation to buy or sell any options, or to purchase or sell any credit spreads. Trading options only carries a high degree of risk, is not suitable for all traders/investors, and you may lose all of your premium money invested in the options. If you have never traded options before, we strongly recommend that you read a little background information made available by the government. Only you can determine what level of risk is appropriate for you. Also, prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options.

Past performances DO NOT guarantee future results. Please consult with your own independent tax, business and financial advisors with respect to any trade. We will NOT be responsible for the consequences of anyone acting on this purely demonstration material.

 

 

 

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