RUT WeeklysSM Options (RUTW)

Cboe offers RUT options with weekly expirations. RUT Weeklys options (RUTW) expire at the end of the day each Friday (PM settled) -- as opposed to the standard third Friday of the month expirations -- and may be listed with expirations of up to six consecutive weeks. Weeklys options provide opportunities to pinpoint more targeted buying, selling or spreading strategies and can help investors take advantage of market news and events.

The trading hours for options on RUT and RUTW (RUTW: RUT Weeklys, RUT End-of-Months, and RUT End-of-Quarters options) are from 8:30 a.m. – 3:15 p.m. (Central Time). On the last trading day, expiring RUTW options will trade until 3:00 p.m. and non-expiring RUTW options will continue to trade until 3:15 p.m. (Central Time).

Key Features of RUT WeeklysSM Options Include:

  1. Hybrid Trading System For Trading Flexibility
    • RUT Weeklys are available on Cboe's Hybrid® Trading System , which incorporates electronic and open-outcry trading in order to enable investors to choose their trading method.
  2. PM-Settlement
    • Aligns with single-stock options and ETF options and with Russell 2000 options traded OTC.
    • Preferred by many investors including those with end-of-day reporting needs.
    • The ability to trade in and out of positions on settlement day.
  3. Large Contract Size With a $100 Multiplier
    • If the Russell 2000 Index is at 1100, RUT Weeklys options have a notional size of about $110,000 (ten times larger than IWM options).
  4. Cash-Settlement, European-Style Exercise
    • Like RUT and most other index options, and unlike IWM and other ETF options.
    • No risk of early assignment and loss of dividends, no portfolio disruption on assignment.
  5. Margin
    • Cboe Regulatory Circular RG15-183 notes that Cboe rules allow a short position in a cash-settled-index option established and carried in a margin account to receive covered margin treatment, if the short option position is offset in the same account by an equivalent position in an index-tracking ETF that is based on the same index that underlies the short option(s).

      In order to receive covered margin treatment, the market value of the offsetting ETF position must be equivalent or exceed the current aggregate index value of the option being covered. One should note that not all ETFs are managed so as to maintain a share price that is a constant fraction (e.g., 1/10 th, 1/100 th, 1/1,000 th, etc.) of the index being tracked.
  6. Tax Treatment
    • Under section 1256 of the Tax Code, profit and loss on transactions in certain exchange-traded options, including RUT and RUTW, are entitled to be taxed at a rate equal to 60% long-term and 40% short-term capital gain or loss, provided that the investor involved and the strategy employed satisfy the criteria of the Tax Code*

* Investors should consult with their tax advisors to determine how the profit and loss on any particular option strategy will be taxed. Tax laws and regulations change from time to time and may be subject to varying interpretations.