Quick Answer
A trading rotation is the auction that opens an options series rather than letting it drift into continuous trading. Orders and quotes gather in a queuing book beforehand, five order categories are exceptions ranging from outright rejection to conversion, the exchange publishes opening auction updates throughout, and a class-specific trigger starts the rotation itself.
An options series does not simply start trading. It queues, the exchange publishes what the queue looks like, and a trigger tied to the underlying market starts the auction. This lesson covers everything up to that trigger. The lesson on opening a series in a rotation covers what the system does once the rotation begins, and a third lesson covers what happens after it concludes.
What Is the Queuing Period, and What Goes Into It?
The queuing period is the time before an opening rotation begins during which the system accepts orders and quotes into the queuing book for participation in the opening rotation for the applicable trading session. Orders and quotes on the queuing book may not execute until the opening rotation.
The queuing book also takes in good til canceled (GTC) and good til date (GTD) orders that remain on the book from the previous trading session or trading day.
| Class and session | Queuing period begins |
|---|---|
| All-sessions classes, index options | 8:00 p.m. (previous day) |
| All-sessions classes, equity options, global trading hours | 7:15 a.m. |
| Regular-hours-only classes | 7:30 a.m. |
Exam Tip: Gotchas
- Queued interest cannot trade before the rotation. The rule says orders and quotes on the queuing book are not eligible for execution until the opening rotation, so an aggressive order entered at 7:31 a.m. sits and waits.
- A resting GTC or GTD order is swept into the queuing book automatically. The user does not re-enter it for the opening.
Which Orders Does the System Treat as Exceptions in the Queuing Period?
During the queuing period the system accepts all orders and quotes available for a class and trading session, and all of them are eligible for execution during the opening rotation, with five exceptions.
| Order or marking | What the system does |
|---|---|
| Immediate-or-cancel (IOC) and fill-or-kill (FOK) orders | Rejected during the queuing period |
| Match trade prevention (MTP) modifiers | Accepted during the queuing period, but not enforced during the opening rotation |
| All-or-none (AON), stop and stop-limit orders | Accepted, but do not participate; those the system receives during the queuing period are entered into the book in time priority after the rotation completes |
| Intermarket sweep orders (ISOs) | All ISOs received before the rotation completes are converted into non-ISOs |
| Complex orders | Do not participate in this opening auction process; may instead participate in the complex order book opening process under the Cboe complex order rule |
Exam Tip: Gotchas
- Acceptance and participation are separate questions. An all-or-none, stop or stop-limit order is accepted during the queuing period and still does not participate in the rotation.
- An immediate-or-cancel or fill-or-kill order is rejected, not merely held. Those two are the only order types on the list the system refuses outright.
- The intermarket sweep conversion reaches every such order received before the rotation completes. It is not limited to orders entered during the queuing period.
What Does the Exchange Publish While a Series Waits to Open?
Opening auction updates are exchange-disseminated messages carrying information on the expected opening of a series, based on orders and quotes in the queuing book for the applicable trading session and, where applicable, the global trading hours book.
Each update includes the expected opening price, the then-current cumulative size on each side at or more aggressive than the expected opening price, and whether the series would open, together with any reason it would not.
Dissemination begins at 8:00 p.m. (previous day) for the global trading hours session for index options, at 7:15 a.m. for the global trading hours session for equity options, and at 8:30 a.m. for the regular trading hours session, and runs until the conclusion of the opening rotation for the series.
The exchange disseminates the updates every five seconds, unless there are no updates to the opening information since the previously disseminated update, in which case it disseminates updates every minute, to all subscribers to the exchange's data feeds that deliver these messages.
Exam Tip: Gotchas
- The cadence has two speeds, not one. Five seconds is the normal interval; the interval stretches to one minute only when nothing has changed since the last update.
- An update says whether the series would open and why it would not. The reason is part of the message, so a student is not left inferring it from the price alone.
When Does the System Start the Opening Rotation?
Upon the occurrence of one of the following triggers for a class, the system initiates the opening rotation for the series in that class, and the exchange disseminates a message to market participants indicating that the rotation has begun.
For equity options in regular trading hours, the system initiates the opening rotation after a time period the exchange determines for all classes, upon the earlier of two events.
- The passage of two minutes, or such shorter time as the exchange determines, after the system observes, after 9:30 a.m., either the first disseminated transaction or the first disseminated quote on the primary market in the underlying security.
- The system's observation, after 9:30 a.m., of both the first disseminated transaction and the first disseminated quote on that primary market.
Other class types have their own regular-hours triggers. For index options other than options on the Cboe Volatility Index (VIX), the system initiates the opening rotation after a time period the exchange determines for all classes, following its observation after 9:30 a.m. of the first disseminated index value for the underlying index.
For VIX index options, the system initiates the opening rotation at 9:30 a.m.
Global trading hours have two triggers. At 8:15 p.m. the previous day, the system initiates the opening rotation for index options. For equity options it applies the same earlier-of test as regular trading hours, measured from 7:30 a.m. rather than from 9:30 a.m.
Credit options run on their own trigger. The Cboe opening auction rule applies to them, and the system initiates the opening rotation at an exchange-determined number of seconds after 9:30 a.m.
Curb trading hours have no opening rotation. If curb trading hours begin after 4:15 p.m. because of unusual conditions the exchange determines, the exchange initiates an opening rotation at a time it announces, and the queuing period for that rotation begins at 4:15 p.m.
A trading halt declared during curb trading hours is reopened using the post-halt opening auction process described in the lesson on what happens after the opening rotation.
Exam Tip: Gotchas
- The two-minute clock and the both-events test race each other. Whichever comes first triggers the rotation, so observing both a transaction and a quote inside two minutes starts it early.
- The exchange may shorten the two minutes and the rule states no floor. The parenthetical says two minutes or such shorter time as the exchange determines.
- The curb session has no rotation as a baseline. One exists only where the session begins after 4:15 p.m. on unusual conditions, and then at an announced time.
What Should You Check on Exam Day?
- Confirm whether the scenario asks about acceptance or participation; an all-or-none, stop or stop-limit order is accepted during the queuing period and still sits out the rotation.
- Check that an immediate-or-cancel or fill-or-kill order in a queuing-period scenario is rejected rather than queued.
- Match the queuing start time to the class and session named: 8:00 p.m. the previous day, 7:15 a.m., or 7:30 a.m.
- Confirm the update cadence matches the facts: five seconds normally, one minute only when nothing has changed.
- On an equity-option trigger question, take the earlier of the two-minute clock and the observation of both a transaction and a quote.