By Stan Freifeld
In the US, tomorrow, Wednesday November 11th, is Veteran’s Day. While the stock and options markets WILL be open for trading, it is NOT a settlement day. When you buy or sell securities, “settlement” marks the official transfer from the seller to the buyer of the securities and the day when the buyer must pay the seller. In the US, stock trades settle in 3 business days which is referred to as T+3 settlement (the T stands for trade date.) Option trades settle in 1 business day, i.e., T+1 settlement. So if you buy stock on a Tuesday, it settles on Friday (assuming no holidays), and if you buy on a Wednesday it settles on the following Monday. Consequently, stock bought tomorrow will settle on Tuesday. On the day options are exercised, that day is considered the trade date for stock settlement. There are actually 2 days each year that are when the market is open but trades do not settle, the other being Columbus Day.
To all of the veterans, THANK YOU FOR YOUR SERVICE!
Author Stan Freifeld is former Amex market maker and current Senior Options Mentor for McMillan Options Mentoring.
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