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Can You Buy and Sell Stock Options After Hours?

Can You Buy and Sell Stock Options After Hours?
Can you buy and sells stock options after hours? Read on below to find out.

Most of the activity on the stock market happens during the regular trading hours, but you should know that the average retail trader can trade after hours with an online broker account.

The option market hours in the EST time zone last from 9:30 am to 4:00 pm. Since the value of the option is based on the price of the underlying stock, once trading for that particular stock stops, there’s no reason for options to continue trading.

But, can you trade stock options after hours? Let’s break it down!

You should also read my Option guide for beginners, it’s a great place to start.

And whether you are interested in futures, stocks, options or even Forex or crypto, becoming a profitable trader all begins with having a strong foundation by learning fundamental day trading principals and how financial markets work.

What is an Option?

Options give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price or before a certain date. Most people usually mix up options with futures, but they are very different. Options let the trader buy and sell at a specific price, while futures obligate the trader to fulfill more obligations.

A straddle option is an options trading strategy where an investor holds both a call option and a put option with the same strike price and expiration date on the same underlying asset. This strategy is used when the investor expects significant price volatility in the underlying asset but is unsure about the direction of the price movement.

Options trading is usually considered to be one of the riskiest forms of trading. This is because options traders have to pay more upfront and their losses can be unlimited if they are not careful.

Related Read: Can You Buy Lego Stocks?

What Are Options Trading Market Hours?

You can trade options during the regular trading session, which are 9:30 am to 4:00 pm EST from Monday to Friday. This is the same as when you trade during the regular market hours for popular stock, index, and other securities, but not on weekends and religious holidays.

Despite that, there are some exceptions, many options can be traded from 4:00 pm to 4:15 pm, so, you can always trade that extra 15 min. More and more people are trading options after hours, which you can do with an online brokerage account during a 15-minute window after the market closing.

What is ‘After-Hours’ Trading?

After-hours trading is just the buying and selling of securities outside of the traditional trading hours established by stock exchanges which as we explained above is 9:30 am to 4pm Eastern Standard Time. 

After-hours trading allows investors and traders to continue trading activities beyond these standard hours, extending into the evening and early morning hours.

Can You Buy and Sell Stock Options After Hours?
After-hours trading is just the buying and selling of securities outside of the traditional trading hours established by stock exchanges.

Can You Buy and Sell Stock Options After Hours?

The average trader can now trade options after-hours using an online brokerage account. The most stock market activity takes place during the regular trading hours, but even so, exchanges all over the world never close for trading, allowing many retail traders a 24/7 activity.

While stocks can be traded during after-hours sessions, the availability of after-hours trading for stock options is more restricted. Options contracts often have specific trading hours that may differ from the underlying stock’s after-hours trading availability.

Options trading typically mirrors the trading hours of the underlying stock but with some limitations. For example, many options exchanges in the United States, such as the Cboe Options Exchange and the NYSE American Options, offer limited after-hours trading for options contracts.

Options can be bought and sold after hours, but not on all exchanges. Some exchanges only allow trading during regular market hours, while others offer trading 24/7

Why Sell Options After Hours?

There are many reasons why someone would want to buy or sell after hours. The first benefit that comes to my mind is the time, not many retail traders can do it during the regular trading session, so, trading after hours make it more accessible for many people with regular jobs.

Another great reason to trade after hours is to take advantage of earning releases, for example, if you own a stock, the company may publish its quarterly earnings, and they do it AFTER the market is closed. This means the stock and their options may move a lot, letting you get some more gains.

Also, you can take advantage of global market activity, since the European and Asian markets can have some impact on the U.S. Market. This gives traders an incredible opportunity to capitalize on different markets.

Can You Buy and Sell Stock Options After Hours?
The most stock market activity takes place during the regular trading hours, but even so, exchanges all over the world never close for trading, allowing many retail traders a 24/7 activity.

Limitations and Restrictions to Sell Options After Hours

There are several limitations and restrictions that traders should be aware of when considering after-hours trading for stock options.

Limited Liquidity

After-hours trading typically experiences lower liquidity compared to regular market hours. This reduced liquidity can result in wider bid-ask spreads and may make it more challenging to execute trades at desired prices.

Reduced Trading Hours 

While after-hours trading extends beyond regular market hours, the trading window for stock options during these sessions is often narrower. Traders should check with their brokers or trading platforms to determine the specific hours during which options contracts can be traded after hours.

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Availability of Options Contracts 

Not all options contracts may be available for trading during after-hours sessions. Some contracts may have limited liquidity or may not be offered for trading outside of regular market hours. Traders should verify the availability of specific options contracts they wish to trade after hours.

Volatility and Price Movements 

Due to lower liquidity and fewer market participants, after-hours trading can experience increased volatility and larger price movements compared to regular trading hours. Traders should be prepared for potentially rapid price changes and adjust their risk management strategies accordingly.

Can You Buy and Sell Stock Options After Hours?

So, overall, the answer is yes you can buy and sell options after hours and there are definitely benefits to after hours trading that we have highlighted in this post.

However it also depends on the brokerage as well as the underlying stock being traded as to whether or not after hours trading is accessible for traders especially those who want to sell options after hours.

Also, trading stock options after hours is more restrictive than trading the underlying stock. We have also discussed some of the restrictions and limitations as well in this post.

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