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 dig in!
You should read my Option guide for beginners, is a nice place to start.
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.
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.
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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.
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.
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
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.