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What you need to know before trading futures on Sept. 15th
by Mark O’Brien, Senior Broker:
For those of you trading stock index futures and options, remember that tomorrow is Last Trading Day for the September stock index futures contracts and their quarterly options. At 8:30 A.M., Central Time, the September contracts will stop trading and the CME will post a settlement price which will serve to offset any open September futures positions. It will also determine the status of the contracts’ options – whether they’re in or out of the money. Note that this does not apply to Friday Week-3 options tied to the December futures contracts. Those expire at their usual afternoon time.
Tomorrow is nicknamed quadruple witching which refers to the simultaneous expiration of not only stock index futures and options, but also stock options and single-stock futures, which actually ceased trading in 2020 – and was never a much of asset class in the U.S. since their arrival in 2002.
The new front month for the major stock index futures contracts is now December.
For currency futures traders, Monday is an even more important date on the calendar. It’s also Last Trading Day for these futures contracts, however these contracts are true deliverables. Instead of receiving a settlement price with which your open positions will be offset, your open long or short positions will be exchanged for actual cash-based positions in the type of currency your position represents. For example, if you hold a single September British Pound futures contract through Last Trading Day, you will be assigned a short cash position of futures contract’s value of 62,500£, the current U.S. dollar value of which is ±$77,500.
The long and short of it (pun intended), keep a very close eye on the calendar and steer well clear of becoming contractually obligated to deliver or take delivery of a futures contract’s underlying asset.
If you have any questions regarding any of the futures contracts you’re trading and those important dates n the calendar, reach out to your broker at Cannon Trading Co.
Volume in the September contracts will begin to drop off until their expiration Friday, September 15th (8:30 A.M., Central Time). At that point, trading in these contracts halts. Stock index futures are CASH SETTLED contracts. If you hold any September futures contracts through 8:30 A.M., Central Time on Friday, Sept. 15th, they will be offset with the cash settlement price, as set by the exchange.
Monday, September 18th is Last Trading Day for September currency futures. It is of the utmost importance for currency traders to exit all September futures contracts by Friday, September 15th and to start trading the December futures. Currency futures are DELIVERABLE contracts.
The month code for December is ‘Z.’ Please consider carefully how you place orders when changing over.
Watch the video below on how to rollover your market depth and charts!
Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time when it comes to Futures Trading.
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09-15-2023
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This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.
