Explore
Close
Your acceptance of all cookies will permit robust site functionality. If you don't allow cookies, some features and functionality of OCC's site may not operate as expected. If you do not choose either cookie setting for our site, or if you close this window, this message will continue to display on each page you visit. Cookie settings can be controlled in your Internet browser to automatically reject some forms of cookies. For more details on cookies this site uses, see our OCC Site Cookies page. In addition to using cookies, we retain other information, including your Internet Protocol (IP) address, for the purposes listed in the Privacy Policy.

ETF Options

Exchange traded fund options are standardized put and call options on underlying exchange traded funds (ETFs). ETFs are securities representing ownership in portfolios of assets designed with an objective to generally correspond to the price and yield performance of individual indexes.

Unit of Trade:  Each standard contract represents 100 shares of the underlying ETF. Corporate actions, such as rights offerings, stock dividends, and mergers, can result in adjusted contracts representing something other than 100 shares of stock.

Premium Quotations:  Stated in points. One point equals $100. Most ETF premiums are quoted in $.01 increments for options under $3 and $.05 increments for options over $3.

Strike Price Intervals:  In general, ETF strikes will be listed in $1 increments. However, different exchange programs allow for strike-interval listing beyond the standard method. Some short-term options on ETFs will list strikes in $.50 intervals.

Exercise Style:  American-style. Options may be exercised on any business day up to and including the expiration date.

Exercise Settlement Time:  Exercise notices tendered on any business day will result in delivery of the underlying ETF on the second (T+2) business day following exercise.

Expiration Months:  ETFs will list two consecutive near-term expiration months plus two successive months from the January, February or March cycle. LEAPS® expirations may also be added. However, different exchange programs allow for expiration-month listing beyond the standard method.

Expiration Dates:  Monthly options expire on the third Friday of the expiration month. Many products also list weekly options that expire on Fridays. If an exchange holiday occurs on that Friday, weekly options will expire on the preceding Thursday.

Position Limits:  Limits vary according to the number of outstanding share and trading volume. Some ETF position limits may be higher than 250,000 contracts. Customer hedge exemptions are available. Investors may check position limit reports for more information.

Minimum Customer Margin:  Purchases of puts or calls with nine months or less until expiration must be paid for in full. Writers of uncovered puts or calls must deposit / maintain 100% of the option proceeds* plus 20% of the aggregate contract value (current equity price x $100) minus the amount by which the option is out-of-the-money, if any, subject to a minimum for calls of option proceeds* plus 10% of the aggregate contract value and a minimum for puts of option proceeds* plus 10% of the aggregate exercise price amount. Margin requirements for some broad-based ETFs may vary.
*For calculating maintenance margin, use the option's current market value instead of the option proceeds.

Trading Hours:  ETF options will trade the same hours as the underlying ETF. For most ETFs, this is 9:30 a.m. to 4:00 p.m. ET. For certain broad-based ETFs, 9:30 a.m. to 4:15 p.m. ET. Expiring weekly options on some broad-based ETF products may cease trading at 4 p.m. ET, or 15 minutes before the non-expiring options on that same class cease trading.

This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as an endorsement, recommendation or solicitation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of the disclosure document, Characteristics and Risks of Standardized Options. Individuals should not enter into option transactions until they have read and understood this document. To obtain copies, contact your broker, any exchange on which options are traded, or The Options Clearing Corporation, 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 ([email protected]).