Weekly Options

Is it true that some exchanges are trading options series that expire weekly?

Yes, and they call them "Weekly Options Series" or "Weeklys". In addition to previously listed index Weekly options series, the exchanges are now participating in an approved pilot program which allows trading in some equity and ETF Weeklys. These Weeklys have a very short time until expiration – approximately one week. Weekly option series will be listed on a Thursday or Friday and, in most cases, expire the following Friday. Each exchange can list weekly options series on a limited number of classes during the pilot program. You will want to become fully familiar with the contract specifications of any option product you trade by visiting the exchange website where that contract trades.

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Will Weekly options be listed every week?

Weekly Option Series will be listed each Thursday or Friday (Depending on the listing exchange's rules) and expire the following Friday except for those instances when the following Friday is a standard Expiration Friday (The 3rd Friday of the month). If the following Friday is an OCC holiday, the weekly option series will expire on the Thursday preceding the holiday. No new Weeklys are listed that would expire during the expiration week for standard options (The third Friday of each month). In other words, the exchanges do not list new Weeklys on the 2nd Thursday of a month and do not trade Weeklys during the following, standard expiration week until new series are listed on Thursday of that week.

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What is the last trading day for Equity and ETF Weekly options and how do they settle?

Weekly options on equity and ETFs are physically settled and have an American-style exercise feature. The last day of trading for equity and ETF Weeklys is Friday.

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What is the last trading day for Index Weekly options and how do they settle?

You can find this information, which is specific to each index Weekly product, by going to the web site of the exchange that trades that product and viewing the contract specifications. They are cash settled, but their contract specifications vary and you will want to make sure you are fully familiar with their terms. Some may have a last trading day of Thursday and be a.m. settled, others may have a last trading day of Friday and settle p.m. Exercise styles may also vary. For more information you can contact your brokerage firm or 1-888-OPTIONS.

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How can one distinguish the Weekly from the Standard options?

You will see the explicit numerical calendar day of expiration in any contract you trade since the option symbols now include the expiration date. Data vendors may display this data in different formats. Ultimately, entering correct order information for the specific call or put you want to trade is your responsibility. If you have any doubt at all about the product you are trading, the expiration date, the symbology key (if needed) or any other data you're entering then check with your brokerage firm before placing your order.

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Will there be more Weekly options in the future?

Since the pilot program allows each exchange to list only a limited number of Weekly options series, in addition to those listed by other exchanges, that is certainly a possibility.

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Are Weekly options subject to OCC's exercise-by-exception processing procedures?

Yes, as between OCC and its clearing members, Weekly options series are subject to exercise-by-exception processing procedures at expiration. You should understand your broker's requirements and procedures for the submission of exercise instructions for Weeklys and any other option contract you trade. Also note that Weekly equity and ETF options are "American" exercise style and can be exercised on any business day prior to their expiration provided that submission of exercise instructions are in accordance with your broker's requirements and procedures.

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How can I find which Weekly options are trading?

Because weekly open interest expires every week, the exchanges have the ability to list different products from week to week. Although this practice has not been frequent, you will want to check with your brokerage firm, the exchange websites, the OCC site here, or inquire by calling 1-888-OPTIONS for currently available products.

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Can you explain why some securities have several expirations available over 4-5 weeks?

In the last quarter of 2012, the options exchanges received regulatory approval for extended Weekly expirations. The options exchanges can now list up to five consecutive Weekly expirations for selected securities. Although any product with Weekly expirations can be part of the extended Weekly program, the exchanges will typically select the most actively traded options.

If the regular monthly expiration is three weeks away, then investors would most likely see Weekly, Weekly, Monthly, Weekly and Weekly expirations listed over a five-week period. As you can see, no new Weeklys are listed that would expire during the expiration week for regular options, which is typically the third Friday of each month, nor would they be listed if they would expire on the same date as a Quarterly option on the same underlying.

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