What are AM-Settled and PM-Settled Options?

Every option contract has a specific expiration date and time. The expiration can occur either in the morning (AM) or in the afternoon (PM). 

AM-Settled Options:

• The value is determined by the opening price on the expiration date.
• The last trade occurs on Thursday night, and the settlement value is calculated at Friday’s market open.
• This settlement exposed to some overnight risk.

PM-Settled Options:

• These options trade until the market close on the expiration date.
• The value is determined by the closing price on the expiration date.