Introduction
When it comes to trading options, one of the most commonly asked questions is whether you can buy or sell options after the regular trading hours. This is especially true for those who trade the SPDR S&P 500 ETF Trust (SPY), one of the most popular exchange-traded funds (ETFs) in the market. In this blog post, we will answer the question, “Can you buy SPY options after hours?”
What are SPY options?
SPY options are derivative contracts that give the holder the right, but not the obligation, to buy or sell shares of the SPDR S&P 500 ETF Trust (SPY) at a specific price (strike price) on or before a specific date (expiration date). SPY options are traded on various exchanges, including the Chicago Board Options Exchange (CBOE).
Regular trading hours for SPY options
The regular trading hours for SPY options on the CBOE are from 8:30 a.m. to 3:15 p.m. Central Time (CT) on weekdays. During these hours, traders can buy or sell SPY options using their brokerage accounts.
Extended trading hours for SPY options
After the regular trading hours, there are extended trading hours during which SPY options can still be traded. The CBOE offers two extended trading sessions: the Global Trading Hours (GTH) session and the Extended Trading Hours (ETH) session. The GTH session runs from 2:00 a.m. to 8:15 a.m. CT, while the ETH session runs from 3:30 p.m. to 4:00 p.m. CT. During these sessions, traders can buy or sell SPY options, but the liquidity may be lower, and the bid-ask spreads may be wider than during the regular trading hours.
Can you buy SPY options after hours?
The answer is yes, you can buy SPY options after hours. However, you need to have a brokerage account that allows you to trade during the extended trading hours. Not all brokerages offer this feature, so you need to check with your broker first.
Benefits of buying SPY options after hours
Buying SPY options after hours can be beneficial for several reasons. First, it allows you to react to news and events that happen after the regular trading hours. For example, if a company announces earnings after the market closes, you can buy or sell SPY options based on your analysis of the news. Second, it allows you to take advantage of market movements that happen outside the regular trading hours. For example, if there is a significant move in the futures market overnight, you can buy or sell SPY options based on your analysis of the futures market.
Risks of buying SPY options after hours
Buying SPY options after hours also comes with risks. The liquidity may be lower, and the bid-ask spreads may be wider than during the regular trading hours. This means that you may not be able to buy or sell SPY options at the price you want, and you may have to pay a higher price than you would during the regular trading hours. In addition, the news and events that happen after the regular trading hours may not be fully priced into the SPY options market yet, which can lead to higher volatility and unpredictability.
Tips for buying SPY options after hours
If you decide to buy SPY options after hours, here are some tips to keep in mind:
- Check with your broker to make sure you can trade during the extended trading hours.
- Be aware of the liquidity and bid-ask spreads during the extended trading hours.
- Have a clear strategy and plan before entering a trade.
- Monitor the news and events that happen after the regular trading hours.
- Be prepared for higher volatility and unpredictability.
Conclusion
In summary, you can buy SPY options after hours, but you need to have a brokerage account that allows you to trade during the extended trading hours. Buying SPY options after hours can be beneficial, but it also comes with risks. Therefore, it is important to have a clear strategy and plan before entering a trade and to monitor the news and events that happen after the regular trading hours.
