Settlement Time

Settlement time refers to the time at which the official settlement price for a futures contract is calculated. There are two types: the daily settlement (used to mark positions to market each day) and the final settlement (used at contract expiry).

Daily settlement: 4:15 PM ET

Each day, CME calculates a daily settlement price for equity index futures at 4:15 PM ET: 15 minutes after the RTH close. This price is used to:

• Mark open positions to market (calculate daily unrealized P&L)
• Determine variation margin (cash debited or credited from your account overnight)
• Set the reference price for the following day

The 4:15 PM settlement price is typically close to but not identical to the 4:00 PM closing price, as the futures continue trading for 15 minutes after the equity cash close.

Final settlement: expiry Friday SOQ

At quarterly expiry, the final settlement price for ES and NQ is determined by the Special Opening Quotation (SOQ): a price calculated from the actual opening transaction prices of each component stock in the index on expiry Friday morning.

The SOQ is often different from the index’s pre-open indicated level, because each stock opens at its own time. The final settlement can be 10–30+ points away from where futures were trading Thursday evening.

Key implications:

• Do not hold expiring contracts through expiry Friday unless you are comfortable with SOQ risk
• The Thursday before expiry is effectively the last liquid trading day for most participants
• Positions held to settlement are cash-settled at the SOQ: no physical delivery

Why settlement time matters for day traders

Margin resets: overnight margin is calculated off the daily settlement price. If you hold a position after 4:00 PM ET, your overnight margin requirement is based on the 4:15 PM settlement.

Mark-to-market: your daily P&L in a futures account is settled each night based on the daily settlement price, not your actual entry and exit prices. This is called variation margin and is a fundamental feature of futures accounting.

End-of-day positioning: institutional portfolio managers often execute large orders near 4:00–4:15 PM to get fills near the settlement price, contributing to the power hour volume surge.