Wednesday Weekly Options on S&P 500 and E-mini S&P 500 futures (launched September 26, 2016) expire on the Wednesday each week, providing additional flexibility for participants to tailor their market exposure based on anticipated and potentially market-moving events.
Wednesday options are structured in the now tried-and-true design of the Weekly and End-of-Month equity index options – European-style exercise, with the automatic exercise of the options determined versus the 3:00 p.m. CT E-mini S&P 500 futures fixing calculation. In-the-money options are exercised into the nearest expiring index futures contract; contrarian instructions are not allowed for these options. As such, both long and short participants know their position post-options expiry immediately after 3:00 p.m. CT on the expiring Wednesday, which is particularly helpful since the options expire midweek and the underlying futures continues to trade. There is no need for short options position holders to wait for options assignment reports to ascertain their futures position prior to the next trade date.
Two consecutive Wednesday options are listed for trading. With this addition, there will be at least two options expirations each week: Wednesday and Friday, with the possible additional expiration of the month-end day within the same week. The addition of the Wednesday expiration makes it possible to structure trades more precisely. For example, some important earnings announcement as well as FOMC meetings may occur in the first half of the week, while Non-farm payroll and other important statistics are released in the second half of the week. Wednesday options allow traders to take advantage of the nuances of the information flow within a week more precisely. Relative value can be better exposed between options of successive expirations. The additional set of instruments also allows hedgers to fine-tune their Greek-letter exposure with more granularity.
As the world's leading and most diverse derivatives marketplace, CME Group is where the world comes to manage risk. Comprised of four exchanges - CME, CBOT, NYMEX and COMEX - we offer the widest range of global benchmark products across all major asset classes, helping businesses everywhere mitigate the myriad of risks they face in today's uncertain global economy.
Follow us for global economic and financial news.
Register for regular updates here and manage your email preferences.