DATE: May 6, 2013 QUESTION: Can you explain the difference between AM and PM expiration of options? ANSWER: Equity options typically follow a protocol know as PM expiration. This means that their settlement value is based on the closing prices of the equities on the last day of trading. In contrast, Index options like those pertaining to the S&P 500 Index (SPX) typically follow a protocol know as AM expiration. This means that the cash value to which the options settle is based on the opening prices of the equities on expiration Friday. To learn more about AM and PM expiration, view this week's segment of "Ask the Institute."
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