Where opportunity and precision meet halfway
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.
View the current listing of equity options with our Interactive Expiration Calendar.
All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
