Effects on Options When the Underlying Stock Stops Trading

There are a number of reasons that a stock might stop trading. Sometimes, trading on a specific symbol will be temporarily halted by the exchanges due to extreme volatility or other unusual factors. In other cases stocks can be delisted, or removed from the market entirely, which often occurs as a result of mergers, acquisitions, or bankruptcies.

When a stock is halted, the options for that stock are also halted. That means that if you’re holding options on a symbol that’s halted, you won’t be able to close that position unless the stock begins trading again. It also means that you can’t open new option positions on a halted symbol either.

When a stock is delisted, the situation may differ. In contrast to trading halts, delistings are usually planned and anticipated in advance. In some cases, they may be accompanied by an acceleration of option expirations, or an adjustment of option deliverables in the case of a merger or acquisition. You can check the Options Clearing Corporation’s website to find regularly published memos detailing such adjustments.

If you're worried about turmoil in the market for options you hold, remember to monitor your positions closely. Conditions can change quickly, and you may need to act fast to protect yourself.

Option trading entails significant risk and is not appropriate for all investors. Option investors can rapidly lose the entire value of their investment in a short period of time and incur permanent loss by expiration date. You need to complete an options trading application and get approval on eligible accounts. Please read the Characteristics and Risks of Standardized Options and Option Spread Risk Disclosure before trading options.