What is the settlement date?
In one line: The settlement date is the day a trade becomes final and the cash and shares officially change hands, which for US stocks and options is one business day after the trade (T+1).
How it works
A trade has two dates. The trade date is when you buy or sell. The settlement date is when it's final: the cash leaves one account and the shares land in the other.
In the US, stocks and options settle one business day after the trade. That's called T+1, "trade date plus one." It has been the rule since May 2024. Canada moved to T+1 at the same time.
Weekends and market holidays don't count. A trade on Friday settles on Monday, or Tuesday if Monday is a holiday.
Settlement matters most in cash accounts. There, you're expected to pay with settled cash. Selling shares and buying again before the cash settles can break your broker's rules.
An example (hypothetical)
You sold a $45 put on XYZ for $1.00 (an illustration, not a trade idea). On expiry Friday, XYZ closes at $42. Here's how it lands:
| When | What you see |
|---|---|
| Friday, after the close | The put is exercised, and you're assigned |
| By Monday morning | 100 XYZ shares in your account; $4,500 of cash gone |
| One business day after the exercise | The stock trade settles |
| Monday, XYZ still at $42 | Shares worth $4,200: −$200 so far (−$300 on shares, +$100 premium) |
You can sell the shares on Monday morning if you want out. You don't have to wait for settlement to sell shares already in your account. A math example, not a promise.
Why it matters for sellers
In the wheel strategy, every assignment is a stock trade. A put assignment buys shares. A call assignment sells them. Settlement is when that money is officially gone or yours.
Two habits help. First, keep the cash for a put already settled in the account, not "on the way." Second, after shares are called away, check that the cash has settled before you count on it for the next put, especially in a cash account. Your broker's help pages explain its own rules.
The premium you collect when you sell an option settles T+1 as well.
Questions
When do I get the cash after my shares are called away?
The sale happens on the exercise date and settles one business day later. Most brokers show the cash right away, but it may be marked unsettled until then.
What does T+1 mean?
Trade date plus one business day. It's how long US trades take to become final.
Can I trade with unsettled cash?
In a margin account, usually yes. In a cash account, rules apply to stop "free-riding," buying and selling before you've paid. Check your broker's help pages.
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