AM settled vs PM settled options: when is the final price set?
A PM-settled option gets its final value from the closing price on expiration day, and you can trade it until then. An AM-settled option gets its final value from that morning's opening prices, and trading usually stops the day before. The gap between those two moments is where sellers get hurt.
The short answer
PM-settled means the option's final value comes from the closing price on expiration day. You can watch it, trade it and close it right up to the end.
AM-settled means the final value comes from a special number built from the opening prices of the stocks in an index on expiration morning. On many AM-settled index options, the last day you can trade is the business day before expiration. So once Thursday's bell rings, a Friday-expiry AM contract is out of your hands.
US stock and ETF options settle the PM way. AM settlement shows up on some cash-settled index options. The best-known case, as of October 2026, is S&P 500 index options on Cboe. The standard monthly SPX contract is AM-settled. It stops trading at the close on the business day before expiration, usually a Thursday, and its value is set from Friday's opening prices. The SPXW weeklies mostly settle on the close and trade until expiration day. Cboe has approved a change that would let AM-settled contracts trade until 9:25 a.m. ET on expiration morning, but no start date was set as of October 2026. Read the contract specs on Cboe's site before you sell one.
Side by side
| AM-settled | PM-settled | |
|---|---|---|
| Final value comes from | Opening prices on expiration morning | The close on expiration day |
| Last day you can trade | Usually the business day before | Expiration day itself |
| Can you react to Friday's news? | No | Yes, until the close |
| Final number you can see coming | Not exactly; it is built from many opening trades | Yes, it is the closing level |
| Where you find it | Some index options, often the monthly ones | US stock and ETF options; many index weeklies |
| Main risk for a seller | An overnight gap you cannot trade against | A late-day move into the close |
Expiration date vs last trading day
For most US stock options, these are the same day. For an AM-settled index option, they are not. The expiration date may be Friday, but the last chance to close is Thursday. Your broker's order ticket may still show "Friday". The contract specs say which day trading ends.
The AM settlement value is also not the first index level you see at 9:30. It is put together from each stock's own opening trade, and some stocks open late. The final number can differ from anything you saw on screen.
A worked example (hypothetical)
A made-up index sits at 4,950 on Monday. You sell a 4,900 / 4,850 put Credit spread expiring Friday for a $10.00 credit. Each point is worth $100.
- Credit: $10.00 × 100 = $1,000.
- Width: 50 points × 100 = $5,000.
- Max loss: $5,000 − $1,000 = $4,000.
Thursday's close is 4,920, 20 points above your short strike. It looks fine. Then bad news lands overnight.
| Friday path | AM-settled spread | PM-settled spread |
|---|---|---|
| Opening value 4,860, close 4,890 | Short put owes 40 points: −$4,000 + $1,000 = −$3,000 | Short put owes 10 points: −$1,000 + $1,000 = $0 |
| Opening value 4,860, close 4,840 | −$3,000, set at the open | Both legs in the money, full width: −$4,000 |
| Opening value 4,930, close 4,910 | Both puts expire: +$1,000 | Both puts expire: +$1,000 |
The AM version was decided before you could place a single order. It looked safe at Thursday's close and settled through the strike on Friday's opening prices. In the first path, the index came back by the close and the PM seller ended flat. In the second, the PM seller did worse.
So AM settlement is not always worse in dollars. It is worse in control. With PM settlement you can close at 9:31 and take a smaller loss. With AM settlement there is nothing to click.
Many sellers close AM-settled index positions by Thursday's close instead of carrying them into Friday morning. They pay a little to step out of a gap they cannot manage.
Which one should you trade?
| Pick AM-settled if… | Pick PM-settled if… |
|---|---|
| You plan to close before the last trading day | You want to manage the trade until the end |
| You accept an overnight gap as part of the deal | You don't want a number set while you can't trade |
| You know the contract's last trading day cold | You sell options on stocks or ETFs |
A cash-settled index option never hands you shares, so it does not fit the wheel strategy. See cash-settled vs physically settled and SPY vs SPX options for that side. Index spreads need a margin account and a higher options level at most brokers. The options strategy comparison chart shows where spreads sit next to the other choices.
Questions
What does AM-settled mean in options?
The option's final value comes from a number built from the opening prices on expiration morning. Trading in the contract usually stops the business day before. Whatever the market does overnight sets your result.
Are stock options AM-settled or PM-settled?
US stock and ETF options settle on expiration day's close, the PM way. AM settlement shows up on some cash-settled index options. Check the contract specs for any index product before you trade it.
Can I close an AM-settled option on expiration day?
Not on standard monthly SPX options, as of October 2026. Trading stops at the close on the business day before expiration. Cboe has approved a change to 9:25 a.m. ET on expiration morning, with no start date set yet. Even then, the final value comes from opening trades you can't react to. If you want out, close by the last trading day's close.
Why is the settlement value different from the opening index level?
It is built from each stock's own first trade of the day, and those don't all happen at 9:30. The final value can land away from any index level shown on screen.
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