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Options that settle based on the closing price on expiration day (PM settlement). The standard for equity options, ETF options, and SPX weekly options. Last trading day is expiration day itself.
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Key takeawayPM settlement is the default. You can trade until 4:00 PM on expiration day. The settlement price is the closing price — no overnight gap between last trade and settlement.
💡 Why It Matters
PM settlement is the standard and gives you full control — you can trade until 4:00 PM on expiration day. No overnight gap between last trade and settlement. Most equity and ETF options use PM settlement.
⚙ How It Works
The settlement value is the closing price on expiration day. You can trade the option until market close. SPX weekly options use PM settlement (unlike SPX monthlies which use AM). All equity options use PM.
📋 Example
SPY put spread expiring Friday. You can adjust or close any time until 4:00 PM Friday. If SPY drops toward your strike at 3:30 PM, you can still close. No overnight gap risk.
⚠ Common Mistakes
Assuming all SPX options are AM-settled. SPX weeklies are PM-settled. Only SPX monthly expirations use AM settlement. Check the settlement method before choosing your expiration.
❓ FAQ
What is PM-Settled Options?
Options that settle based on the closing price on expiration day (PM settlement). The standard for equity options, ETF options, and SPX weekly options. Last trading day is expiration day itself.
Why does PM-Settled Options matter for premium sellers?
PM settlement is the default. You can trade until 4:00 PM on expiration day. The settlement price is the closing price — no overnight gap between last trade and settlement.
How does PM-Settled Options work?
The settlement value is the closing price on expiration day. You can trade the option until market close. SPX weekly options use PM settlement (unlike SPX monthlies which use AM). All equity options use PM.
What are common mistakes with PM-Settled Options?
Assuming all SPX options are AM-settled. SPX weeklies are PM-settled. Only SPX monthly expirations use AM settlement. Check the settlement method before choosing your expiration.
Related Terms
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Adjusted Option
An option whose terms have been modified due to a corporate action — stock split, special dividend, merger, or spinoff.
All-or-None Order
An order that must fill completely or not at all, but unlike FOK, it can wait in the book for a complete fill rather than canceling immediately.
American-Style Option
An option that can be exercised by its holder at any time from listing until expiration.
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