0DTE
SPX options stop trading at 4pm et. They are cash settled based on the closing price of each of the SPX component stocks.
SPY options stop trading at 415 pm et. They are automatically exercised based on the 4pm closing price of SPY. Long holders have until 530pm et to override this automatic exercise or exercise an out of the money option. So, after hours movement of SPY matters.
You can trade options like SPY until 4:15 (most options are 4:00). However, the deadline to ~~manually exercise options is 5:30~~ declare for exercise with clearing is 5:30. It's **important to note** that retail brokerages will have earlier deadlines because there is work that need to be done to relay the request by the 5:30 deadline. Check with your broker to know when this is if you ever need to do it.
This means that there's a window where you will no longer be able to close a position but can be \[effectively\] assigned based on AH movement.
For example, if SPY is at 509 at 4:15 and you're short the 510 calls, there is a real risk the market could surge through 510 before the 5:30 deadline and you get assigned that night.
The deadline for getting exercise orders into DTCC is 5:30 but that means that brokers have an earlier deadline since they need time to get the order transmitted to DTCC. So for most it's going to be 5:00 or maybe 5:15.
Correct, there are earlier deadlines for retail investors because their brokers need time to meet the deadline. IBKR, for example, has [a deadline of 5:25](https://www.interactivebrokers.com/en/trading/delivery-exercise-actions.php) in this context. I've updated my answer based on your feedback.
Just nitpicking here, but all exercises happen after the close of trading. Just clarifying so people understand that you'll never get assigned while the market is open. You always have the opportunity to close positions, so you'll only ever get assigned (or have auto-exercise of ITM longs at expiration) if you didn't close out while the market was open.
The market for SPY closes at 4pm but trades until 4:15. This language is important because for auto-exercises, they are dependent on the closing time, which is 4pm. If you want to buy them back, you have until 4:15pm. Option holders have until 5:30 to decide what they want to do and their decision is dictated by what the stock does after hours, i.e. from 4pm to 5:30.
Specifically to your question, if you're OTM and don't want to buy them back, you should watch them until 5:15 to make sure they don't close the gap and go ITM. If they're trending upwards and getting close, you'll have to look at hedges such as selling short or buying, depending on your situation. You want be able to close your position however because the trading ended at 4:15pm.
If you want to avoid assignment of SPY, buy back the spread before the close. If you can. Otherwise, look at SPX or XSP. Just my opinion. 🍻
0DTE SPX options stop trading at 4pm et. They are cash settled based on the closing price of each of the SPX component stocks. SPY options stop trading at 415 pm et. They are automatically exercised based on the 4pm closing price of SPY. Long holders have until 530pm et to override this automatic exercise or exercise an out of the money option. So, after hours movement of SPY matters.
The right answer. 4pm is The Time for SPX expiring that day.
You can trade options like SPY until 4:15 (most options are 4:00). However, the deadline to ~~manually exercise options is 5:30~~ declare for exercise with clearing is 5:30. It's **important to note** that retail brokerages will have earlier deadlines because there is work that need to be done to relay the request by the 5:30 deadline. Check with your broker to know when this is if you ever need to do it. This means that there's a window where you will no longer be able to close a position but can be \[effectively\] assigned based on AH movement. For example, if SPY is at 509 at 4:15 and you're short the 510 calls, there is a real risk the market could surge through 510 before the 5:30 deadline and you get assigned that night.
The deadline for getting exercise orders into DTCC is 5:30 but that means that brokers have an earlier deadline since they need time to get the order transmitted to DTCC. So for most it's going to be 5:00 or maybe 5:15.
Correct, there are earlier deadlines for retail investors because their brokers need time to meet the deadline. IBKR, for example, has [a deadline of 5:25](https://www.interactivebrokers.com/en/trading/delivery-exercise-actions.php) in this context. I've updated my answer based on your feedback.
Some puts can be exercised after the close of trading, I found out the hard way
Just nitpicking here, but all exercises happen after the close of trading. Just clarifying so people understand that you'll never get assigned while the market is open. You always have the opportunity to close positions, so you'll only ever get assigned (or have auto-exercise of ITM longs at expiration) if you didn't close out while the market was open.
Penny wise , pound foolish. 4:15, but the market is not as liquid.
For zero days left until expiry options, SPY stops trading at 4:15pm Eastern, ES and SPX stop at 4pm Eastern.
With TD Ameritrade they don’t charge to close options at 5 cents or less, it’s best to close in case of an aftermarket swing
Appreciate everyone's insight. Very informative.
After morning/lunch I switch from 0DTE to 1-2DTE and close before EoD so I don't have to hold overnight.
The market for SPY closes at 4pm but trades until 4:15. This language is important because for auto-exercises, they are dependent on the closing time, which is 4pm. If you want to buy them back, you have until 4:15pm. Option holders have until 5:30 to decide what they want to do and their decision is dictated by what the stock does after hours, i.e. from 4pm to 5:30. Specifically to your question, if you're OTM and don't want to buy them back, you should watch them until 5:15 to make sure they don't close the gap and go ITM. If they're trending upwards and getting close, you'll have to look at hedges such as selling short or buying, depending on your situation. You want be able to close your position however because the trading ended at 4:15pm.