1. What are Short-Term Options?
Short-Term Options, or WeeklysSM, are listed index and equity options that match all other terms of standard options except they are listed for trading for approximately one week and expire on Fridays (not Saturdays) other than the third Friday of a month.
2. What are the terms of Short-Term Options?
Puts and calls on up to twenty strike prices may be listed. As of July 1, 2010, series can be opened on a Thursday that is a business day and with the last day of trading for an A.M.-settled (European-style exercise) contract being the following Thursday, and the last day of trading for a P.M.-settled (American-style exercise) contract being the following Friday. In the event the following Thursday or Friday is not a business day, the last day of trading will be moved up to the next preceding business day. If CBOE opens less than twenty strikes, additional strikes may be opened for trading when necessary to maintain an orderly market, to meet customer demand or when the market price of the underlying security moves substantially from the exercise price or prices of the strikes already opened. CBOE will not list Weeklys that expire on traditional expiration days (third Friday of a month) because standard options with identical terms would already exist.
Contract terms of Weeklys will match those of standard options, including strike price increments, minimum tick increments, exercise style, and underlying. For example, cash-settled index Weeklys will generally be A.M.-settled and European-style exercise, while equity Weeklys are physical delivery, P.M.-settled, and American style exercise. For position limits, positions in Weeklys will be combined with those of standard options with the same underlying for calculation purposes. Margins for Weeklys will match those of standard options with the same underlying.
3. How will I exercise Weeklys upon expiration?
Open positions in equity and index Weeklys will expire on Fridays (OCC processing will occur on Fridays, not Saturdays).
Expiration processing at the OCC for expiring Index Weeklys will be comparable to Index Flex expiration processing. European style Index Weeklys will allow exercises only on the business day they expire (usually a Friday). Index Weeklys will be automatically exercised using the "standard index" automatic exercise threshold class. That is, like other index options, exercise-by-exception ("ex-by-ex") responses will not be allowed.
Expiration processing at the OCC for expiring Equity Weeklys will be comparable to equity Flex expiration processing. Equity Weeklys will be subject to exercise-by-exception processing using "standard equity" automatic exercise threshold class. Exercise-by-exception responses will be allowed. (Note: equity option Weeklys will be American-style exercise and can be exercised on any Exchange business day.)
Please note that the OCC member window is closed at 7:00 p.m. Central time, so members reporting trades after that time will not be able to respond to OCC's exercise-by-exception process for equity Weeklys. Contact your broker to find out their deadline for requesting exception processing. (This does not pose an issue for Index Weeklys since all in-the-money index Weeklys are exercised automatically.)
4. On what day of the week will Weeklys typically be listed for trading?
As of July 1, 2010, Weeklys typically will be listed at the opening on Thursday mornings. If the Thursday is a holiday, Weeklys will be listed at the opening of the preceding CBOE business day.
5. Will Weeklys be A.M. or P.M.-Settled?
CBOE's Weeklys will settle in the same manner as the standard options based on the same underlying index or equity. If the standard option contract for a particular class is A.M.-settled, Weeklys based on the same underlying will be A.M.-settled. The last trading day for AM settled Weeklys is the day before expiration. As expiration is typically on Fridays, the last trading day for AM settled Weeklys will typically be Thursdays.
Note that SPX and DJX Weeklys are A.M. settled (last trading day ordinarily is Thursday) but OEX and XEO are P.M. settled (last trading day ordinarily is Friday).
If the standard option contract for a particular class is P.M.-settled, as most equity and ETF classes are, Weeklys based on the same underlying will be P.M.-settled. P.M.-settled Weeklys can be traded until the close on the business day they expire (ordinarily Friday).
6. Will Weeklys be American or European Exercise Style options?
The exercise-style of Weeklys will be the same as that of standard options based on the same underlying index or equity. Equity Weeklys will generally be American and Index Weeklys will generally be European.
7. How will I know what indexes and equities have Weeklys listed on them?
CBOE will display this information on www.cboe.com/weeklys.
8. How will I know when Weeklys expire?
Weeklys will generally expire on Fridays.
9. What will be the Strike/Month Codes for Weeklys?
In general, strike and month codes for Weeklys are the same as those used for standard options based on the same underlying. Strike/Month codes to be used for a Weeklys class will be announced as part of CBOE's New List memo and by the OCC in its master file.
10. Will continuous markets be provided for Weeklys?
Yes. The CBOE market making community will provide continuous quoting for Weeklys in a similar manner as that of standard options based on the same underlying.
11. How will data vendors display quotes on Weeklys?
Data vendors may choose to display quotes on Weeklys within the same option chain as regular options or may choose to display quotes on separate pages. Please contact your data provider.
Click here for delayed Weeklys quotes from CBOE.com.
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