WHAT IS Open Rotation

Open Rotation is the system of opening trading on an options market, usually for the first time each morning during a normal trading day. The open rotation system also comes into play if trading is halted in the middle of the day, or in some cases, for multiple days.

The term open rotation also refers to an order to buy or sell an options security that is to remain active through a normal trading day's opening trading rotation. Open rotation orders that are not filled during the initial rotation automatically expire.


Open Rotation roughly equates to an at-the-opening order, but in the options market, as opposed to equities. Unlike stocks, options must wait to begin trading until an opening price for the underlying security is determined. This is conducted through a process that accepts orders and quotes for the series of call options that expire the soonest and have the lowest strike price. This rotation continues through all the near-term series of call options, then to the calls that expire further out.

Once all of the calls are open, the process continues with the put options, starting with the puts with the highest strike price and the nearest expiration. The rotation system then moves to puts with lower strike prices and then eventually to options with longer-dated expirations. This rotation system continues until all option series underlying a stock are trading on the exchange.

Of note, a rotation sometimes comes into play during fast market conditions if markets are not operating in an orderly fashion. If a stock is halted, all option trading on that stock also is stopped until the stock reopens, and the rotation process is started again.

The length of time it takes to complete the full open rotation for an entire options series depends on the trading volume for both the underlying stock and the options. The process tends to move quicker for stocks with more liquidity. These stocks also tend to have options with relatively more trading volume, which further speeds open rotation.

Use of Open Rotation Aside From Opening Bell

An open rotation order does not necessarily mean the order must be executed at opening bell. It can also apply to trades that are executed when the market opens back up after closing for various reasons, including technical issues that require the reopening of trading midday. For example, floor officials on the Chicago Board Options Exchange can stop trading for up to two business days if the underlying stock has a delayed opening, or if other unusual circumstances exist. Once trading resumes, open rotation comes back into play. Further, the exchange may suspend the use of stop and limit orders during unusual market conditions to help restore the market’s integrity. Again, open rotation is used when the market restarts.