Nikkei 225 Options and SQ Settlement

Nikkei 225 options are index options listed on the Osaka Exchange, part of Japan Exchange Group (JPX). They are European style, they settle in cash against a yen value called the SQ (Special Quotation), and that SQ is calculated from the opening prices of all 225 constituent stocks on the second Friday of the contract month. The settlement mechanic is the part that catches out newcomers, and it is the part with the most data behind it.

What are Nikkei 225 options?

A Nikkei 225 option is a contract on the level of the Nikkei Stock Average, not on any single share. JPX publishes the full specification. The pieces that change how a position behaves, as of August 2026:

• The contract multiplier is 1,000 yen. The quoted premium is multiplied by 1,000 to get the cash that changes hands, and one index point of movement is worth 1,000 yen to the holder.
• Exercise is European. The option can be exercised only at expiration, and a short position carries no early assignment risk. American and European exercise covers what that changes for a holder.
• Settlement is in cash. No shares move. An in-the-money option pays the distance between its strike and the SQ, multiplied by 1,000 yen.
• The last trading day is the business day before the second Friday of the contract month. When that Friday is not a JPX business day, the last trading day is the business day preceding it.
• A smaller contract exists. Nikkei 225 mini Options carry a 100 yen multiplier, one tenth the standard size, and JPX lists expirations on Wednesdays and Fridays rather than once a month.

Trading runs in two sessions. The day session opens at 8:45 in the morning Tokyo time and finishes with a closing auction in the mid afternoon. A night session then runs from 5:00 in the evening until 6:00 the next morning, overlapping European and US hours, which is one way a Tokyo account reaches an active market while Wall Street is open. A different route, trading US contracts directly, is covered in 0DTE options from Japan; US market hours around the world maps the clock.

How is the SQ (Special Quotation) calculated?

SQ day is the business day following the last trading day, normally the second Friday. That morning each of the 225 constituents opens in its own opening auction on the Tokyo Stock Exchange. JPX takes the opening price of every constituent, runs the set through the index formula, and publishes the result as the Special Quotation. Every expiring Nikkei 225 option settles against that single number.

Two things fall straight out of that definition.

The first: the SQ is not a level anyone traded. It is assembled from 225 separate opening prints, each struck in its own auction at its own moment, so the index never quotes the SQ as a live price during continuous trading. A contract can finish in the money against a number that never appeared on a chart.

The second: the last trading day comes before SQ day. A position is closed or carried to expiry on the Thursday. The value it settles at is fixed the next morning, while the option itself is no longer tradable.

US index options run the identical machinery. SPX monthly options settle against SET, calculated from the opening prices of the S&P 500 constituents on the third Friday, which is the dividing line AM settled and PM settled index options walks in detail. The panels below measure that mechanic on US data, where every constituent opening print is on file.

How far can an opening print sit from the previous close?

The distance between an opening print and the prior session's close is the whole reason an opening settlement is worth understanding. Here is SPY, the S&P 500 tracker, on each third-Friday session that traded between January 2025 and June 2026, the mornings on which SET is struck.

WITH sessions AS (
    SELECT toDate(toTimeZone(window_start, 'America/New_York')) AS session_date,
           argMin(open, window_start) AS session_open,
           argMax(close, window_start) AS session_close
    FROM global_markets.delayed_stocks_minute_aggs
    WHERE ticker = 'SPY'
      AND toDate(toTimeZone(window_start, 'America/New_York')) >= toDate('2024-12-01')
      AND toDate(toTimeZone(window_start, 'America/New_York')) <= toDate('2026-06-30')
      AND (toHour(toTimeZone(window_start, 'America/New_York')) * 60
           + toMinute(toTimeZone(window_start, 'America/New_York'))) BETWEEN 570 AND 959
    GROUP BY session_date
),
paired AS (
    SELECT session_date,
           toFloat64(session_open) AS open_px,
           toFloat64(session_close) AS close_px,
           any(toFloat64(session_close)) OVER (ORDER BY session_date ASC
                                               ROWS BETWEEN 1 PRECEDING AND 1 PRECEDING) AS prior_close
    FROM sessions
)
SELECT formatDateTime(session_date, '%Y-%m-%d') AS date,
       formatDateTime(session_date, '%b %e, %Y') AS friday_label,
       round(100 * (open_px - prior_close) / prior_close, 2) AS open_gap_pct,
       round(100 * (close_px - open_px) / open_px, 2) AS open_to_close_pct
FROM paired
WHERE prior_close > 0
  AND session_date >= toDate('2025-01-01')
  AND toDayOfWeek(session_date) = 5
  AND toDayOfMonth(session_date) BETWEEN 15 AND 21
ORDER BY session_date

Across the 16 settlement sessions on file, the opening print landed 0.89% from the prior close on Jan 17, 2025 and -0.85% on May 15, 2026. The second series is what happened afterwards: from that opening print to the close of the same session, the tracker travelled 0.1% and -0.36% on those two days. None of that later movement touches the settlement value. It was already struck.

Two third Fridays inside the window fell on US market holidays, with settlement moving to the preceding Thursday, and the panel counts only the Fridays that traded. JPX applies the same principle from the other side: a second Friday that is not a business day pushes the last trading day back.

A settlement value assembled from many opening prints

The SQ is a blend. To see what "blend" means, take one US monthly settlement morning, Friday May 15, 2026, and follow 12 large constituents one at a time: where each opened against its own previous close, and where it travelled between that opening print and the closing bell.

WITH px AS (
    SELECT ticker,
           toDate(toTimeZone(window_start, 'America/New_York')) AS session_date,
           argMin(open, window_start) AS session_open,
           argMax(close, window_start) AS session_close
    FROM global_markets.delayed_stocks_minute_aggs
    WHERE ticker IN ('AAPL','MSFT','NVDA','AMZN','GOOGL','META','JPM','XOM','JNJ','KO','WMT','CAT')
      AND toDate(toTimeZone(window_start, 'America/New_York')) IN (toDate('2026-05-14'), toDate('2026-05-15'))
      AND (toHour(toTimeZone(window_start, 'America/New_York')) * 60
           + toMinute(toTimeZone(window_start, 'America/New_York'))) BETWEEN 570 AND 959
    GROUP BY ticker, session_date
)
SELECT ticker,
       round(100 * (toFloat64(anyIf(session_open, session_date = toDate('2026-05-15')))
                    / toFloat64(anyIf(session_close, session_date = toDate('2026-05-14'))) - 1), 2) AS open_gap_pct,
       round(100 * (toFloat64(anyIf(session_close, session_date = toDate('2026-05-15')))
                    / toFloat64(anyIf(session_open, session_date = toDate('2026-05-15'))) - 1), 2) AS open_to_close_pct
FROM px
GROUP BY ticker
HAVING countIf(session_date = toDate('2026-05-14')) = 1
   AND countIf(session_date = toDate('2026-05-15')) = 1
ORDER BY open_gap_pct DESC

The opening gaps ran from 1.15% at MSFT to -2.54% at NVDA, a spread across names that were all opening within the same few minutes. An index settlement computed from prints like these lands wherever that particular morning's mix of auctions puts it. Multiply the picture by 225 names and the Nikkei's SQ is the same object: one number, assembled once a month, out of 225 auctions that each cleared on their own supply and demand. Why stocks gap overnight covers where the individual gaps come from.

Nikkei 225 options vs SPX options: how big is one contract?

Contract size is the first thing a US reader gets wrong about the Japanese market, and it is pure specification with no market data required. One index point is worth 1,000 yen on a standard Nikkei 225 option and 100 yen on the mini. One S&P 500 index point is worth 100 US dollars on an SPX option. Those multipliers are quoted in different currencies over indices at very different levels, so a notional comparison needs the current index quotes and the current exchange rate rather than a rule of thumb. What is fixed and comparable: the mini is one tenth of the standard Nikkei contract, both Japanese contracts are cash settled, both are European, and both settle on an opening print rather than a closing price.

Is buying options a reliable way to make money?

This is the question the search box fills with, and the honest answer is that a long option position starts against two measurable headwinds. Neither is a prediction about direction. Both are properties of the contract.

The first is time decay. Theta is the modeled loss in an option's value per share, per day, with the underlying held still. It is not constant across the life of a contract, and the shape is the point.

SELECT days_to_expiry AS dte,
       round(quantileDeterministic(0.5)(toFloat64(abs(theta)), cityHash64(ticker)), 3) AS median_theta_usd,
       round(quantileDeterministic(0.5)(toFloat64(implied_volatility) * 100, cityHash64(ticker)), 1) AS median_iv_pct,
       count() AS contract_count
FROM global_markets.options_greeks
WHERE underlying_symbol = 'SPY'
  AND date >= toDate('2026-01-02')
  AND date <= toDate('2026-06-30')
  AND iv_converged = 1
  AND volume > 0
  AND days_to_expiry BETWEEN 1 AND 60
  AND abs(toFloat64(strike_price) / toFloat64(underlying_close) - 1) < 0.02
GROUP BY dte
HAVING count() >= 30
ORDER BY dte

Read the curve from the long end. At 60 days to expiry the median near-the-money SPY contract carried a theta of $0.168 per share per day. At 1 day to expiry it carried $0.898. A standard contract covers 100 shares, so multiplying either figure by 100 gives the daily cash equivalent. The curve steepens sharply toward expiry, and that steepening is the mechanical cost a long holder pays for the days between entry and settlement. The identical figure is the credit a short holder collects. Zero days to expiry options sit at the far left edge of the curve.

The second headwind is the volatility risk premium. An option's price embeds a volatility number, its implied volatility. The underlying then goes on to move by whatever amount it moves, its realized volatility. The two are rarely equal.

WITH daily AS (
    SELECT toDate(toTimeZone(window_start, 'America/New_York')) AS session_date,
           argMax(close, window_start) AS session_close
    FROM global_markets.delayed_stocks_minute_aggs
    WHERE ticker = 'SPY'
      AND toDate(toTimeZone(window_start, 'America/New_York')) >= toDate('2024-08-01')
      AND toDate(toTimeZone(window_start, 'America/New_York')) <= toDate('2026-07-31')
      AND (toHour(toTimeZone(window_start, 'America/New_York')) * 60
           + toMinute(toTimeZone(window_start, 'America/New_York'))) BETWEEN 570 AND 959
    GROUP BY session_date
),
rets AS (
    SELECT session_date,
           toFloat64(session_close) AS close_px,
           any(toFloat64(session_close)) OVER (ORDER BY session_date ASC
                                               ROWS BETWEEN 1 PRECEDING AND 1 PRECEDING) AS prior_close
    FROM daily
),
realized AS (
    SELECT toStartOfMonth(session_date) AS month_start,
           round(stddevSamp(close_px / prior_close - 1) * sqrt(252) * 100, 1) AS realized_vol_pct,
           count() AS sessions
    FROM rets
    WHERE prior_close > 0
    GROUP BY month_start
),
implied AS (
    SELECT toStartOfMonth(date) AS month_start,
           addMonths(toStartOfMonth(date), 1) AS next_month_start,
           round(quantileDeterministic(0.5)(toFloat64(implied_volatility) * 100, cityHash64(ticker)), 1) AS implied_vol_pct
    FROM global_markets.options_greeks
    WHERE underlying_symbol = 'SPY'
      AND date >= toDate('2024-08-01')
      AND date <= toDate('2026-06-30')
      AND iv_converged = 1
      AND volume > 0
      AND days_to_expiry BETWEEN 20 AND 45
      AND abs(toFloat64(strike_price) / toFloat64(underlying_close) - 1) < 0.05
    GROUP BY month_start, next_month_start
)
SELECT formatDateTime(i.month_start, '%Y-%m') AS month,
       i.implied_vol_pct AS implied_vol_pct,
       r.realized_vol_pct AS realized_vol_pct,
       round(i.implied_vol_pct - r.realized_vol_pct, 1) AS premium_pct,
       round(avg(i.implied_vol_pct - r.realized_vol_pct) OVER (), 1) AS avg_premium_pct
FROM implied AS i
INNER JOIN realized AS r ON i.next_month_start = r.month_start
WHERE r.sessions >= 15
ORDER BY month

Each row pairs the median implied volatility of SPY contracts 20 to 45 days from expiry in one month against the volatility the tracker went on to realize over the following month. Averaged across the 23 months on file, implied volatility ran 1.5 points above the realized volatility that followed, which is the flat line drawn across the chart. The gap is not stable: it measured 1.7 points in 2024-08 and 3.4 points in 2026-06. A month in which the index moves more than the option market had priced puts the gap on the other side of zero.

The pattern is not confined to the index tracker.

WITH daily AS (
    SELECT ticker,
           toDate(toTimeZone(window_start, 'America/New_York')) AS session_date,
           argMax(close, window_start) AS session_close
    FROM global_markets.delayed_stocks_minute_aggs
    WHERE ticker IN ('SPY','QQQ','IWM','AAPL','MSFT','NVDA')
      AND toDate(toTimeZone(window_start, 'America/New_York')) >= toDate('2025-06-20')
      AND toDate(toTimeZone(window_start, 'America/New_York')) <= toDate('2026-06-30')
      AND (toHour(toTimeZone(window_start, 'America/New_York')) * 60
           + toMinute(toTimeZone(window_start, 'America/New_York'))) BETWEEN 570 AND 959
    GROUP BY ticker, session_date
),
rets AS (
    SELECT ticker,
           session_date,
           toFloat64(session_close) AS close_px,
           any(toFloat64(session_close)) OVER (PARTITION BY ticker ORDER BY session_date ASC
                                               ROWS BETWEEN 1 PRECEDING AND 1 PRECEDING) AS prior_close
    FROM daily
),
realized AS (
    SELECT ticker,
           round(stddevSamp(close_px / prior_close - 1) * sqrt(252) * 100, 1) AS realized_vol_pct,
           count() AS sessions
    FROM rets
    WHERE prior_close > 0
      AND session_date >= toDate('2025-07-01')
    GROUP BY ticker
),
implied AS (
    SELECT underlying_symbol AS underlying,
           round(quantileDeterministic(0.5)(toFloat64(implied_volatility) * 100, cityHash64(ticker)), 1) AS implied_vol_pct
    FROM global_markets.options_greeks
    WHERE underlying_symbol IN ('SPY','QQQ','IWM','AAPL','MSFT','NVDA')
      AND date >= toDate('2025-07-01')
      AND date <= toDate('2026-06-30')
      AND iv_converged = 1
      AND volume > 0
      AND days_to_expiry BETWEEN 20 AND 45
      AND abs(toFloat64(strike_price) / toFloat64(underlying_close) - 1) < 0.05
    GROUP BY underlying
)
SELECT i.underlying AS ticker,
       i.implied_vol_pct AS implied_vol_pct,
       r.realized_vol_pct AS realized_vol_pct,
       round(i.implied_vol_pct - r.realized_vol_pct, 1) AS premium_pct
FROM implied AS i
INNER JOIN realized AS r ON i.underlying = r.ticker
WHERE r.sessions >= 200
ORDER BY premium_pct DESC

Over the twelve months to June 30, 2026, the same measurement across six of the most heavily traded US underlyings put the widest gap at NVDA, 40.1% implied against 35.4% realized, a difference of 4.7 points. The narrowest was MSFT at -0.6 points.

None of this makes buying options a losing proposition, and none of it makes selling them a winning one. A long option's loss is capped at the premium paid, which is the asymmetry a buyer is paying for in the first place. What the two panels measure is the size of that entry fee: the position has to clear the decay and the pricing gap before it is ahead, on top of getting direction right. The arithmetic is identical on a Nikkei 225 contract, with one term added. A Nikkei position carried past the last trading day is not marked against Friday's close. It is marked against Friday's opening prints, a number set after the contract stopped trading.

Nikkei 225 options FAQ

What does SQ mean in the Nikkei 225 market?

SQ stands for Special Quotation, the final settlement value of expiring Nikkei 225 futures and options. JPX calculates it from the opening prices of all 225 constituent stocks on SQ day, the business day following the last trading day, which is normally the second Friday of the contract month.

Are Nikkei 225 options American or European style?

European. They can be exercised only at expiration, and they settle in cash against the SQ rather than by delivery of shares. A short position carries no early assignment risk at any point in its life.

What is the contract size of a Nikkei 225 option?

The standard contract has a multiplier of 1,000 yen per index point. Nikkei 225 mini Options use a 100 yen multiplier, one tenth of the size, with expirations listed on Wednesdays and Fridays rather than once a month.

When do Nikkei 225 options stop trading?

On the business day before the second Friday of the contract month. When that Friday is not a JPX business day, the last trading day moves back to the preceding business day. The settlement value is then struck the following morning, after trading in the contract has already ended.

Is buying options a reliable way to make money?

The measurements say a long premium position starts behind on two counts. Median near-the-money SPY theta ran $0.898 per share per day at 1 day to expiry against $0.168 at 60 days, and implied volatility averaged 1.5 points above subsequent realized volatility across the 23 months measured above. Direction still has to be right on top of both.

Every number above is a stored query over US market data, and the settlement mechanic it measures is the one JPX applies to the Nikkei 225 on every second Friday. Open any panel to read the SQL, or run your own version of it on the Strasmore terminal.