Stock Market Closed Memorial Day: What Options Traders Should Know

Is the Stock Market Open on Memorial Day?

No — U.S. stock markets are closed on Memorial Day, which falls on the last Monday of May. Both the New York Stock Exchange (NYSE) and Nasdaq observe the holiday, meaning no equity or options trading will take place. Bond markets also close early the Friday before or remain shut on Monday depending on the year. For 2025, that means traders get a long weekend with no live market action.

For most Americans, Memorial Day signals the unofficial start of summer. For options traders, it signals something equally important: a built-in pause to reassess positions, review watchlists, and plan for what could be a volatile re-open on Tuesday.

A Wild Week in the Rearview Mirror

The holiday break comes after one of the more eventful weeks of the year. Nvidia's quarterly earnings once again dominated headlines, with the AI chipmaker continuing to post results that kept both bulls and bears on their toes. Meanwhile, quantum computing stocks experienced another wave of excitement, with several names seeing outsized moves driven largely by retail momentum and speculative interest.

This kind of news-heavy, sentiment-driven environment tends to inflate options premiums across the board — particularly in large-cap tech and high-growth sectors. That matters a great deal if you're holding positions over a long weekend.

What Happens to Options Over a Holiday Weekend?

Options traders should be aware of a few key dynamics when the market closes for a holiday:

• Theta decay continues: Even though the market is closed, time decay (theta) does not stop. Options lose value over the weekend, which works in favor of sellers and against buyers holding long contracts.
• Implied volatility can shift: After a major earnings week, IV often compresses. Heading into a long weekend following Nvidia's report, elevated IV across AI-adjacent names may continue to deflate — a phenomenon sometimes called a volatility crush.
• Gap risk on re-open: With no ability to react to overnight news on Monday, any macro developments over the holiday weekend will be fully priced in at Tuesday's open. This can create sharp gap moves in either direction.
• Liquidity thins out: In the days surrounding holidays, options market liquidity tends to decrease. Bid-ask spreads can widen, making entries and exits less efficient.

Sectors to Watch When Markets Reopen

Given the week's headlines, several sectors deserve close attention when trading resumes:

• Semiconductors and AI infrastructure — Nvidia's results set the tone for the broader sector. Watch for follow-through moves in names like AMD, Broadcom, and TSMC.
• Quantum computing — Stocks in this space remain highly speculative and momentum-driven. Volatility could swing sharply in either direction with minimal fundamental catalyst.
• Broad market indices — Any macro news over the long weekend — geopolitical developments, Fed commentary, or economic data — could drive significant moves in SPY, QQQ, and IWM options at the open.

What This Means for Options Traders

A market holiday is not a reason to go dark — it's actually one of the best times to do your homework. Use the long weekend to audit your open positions, check expiration dates, and model out how theta decay and potential IV changes could affect your P&L by Tuesday's open.

If you're looking to build a watchlist for the week ahead, this is also a good time to scan for opportunities in deep out-of-the-money LEAPS calls on large-cap stocks. These low-premium, long-dated contracts can offer asymmetric upside with defined risk — particularly relevant in a market where AI and tech narratives continue to drive outsized moves. Tools like the StrikeEdge scanner are designed specifically to surface these kinds of setups, flagging deep OTM LEAPS priced between $0.01 and $0.08 on major names before the crowd catches on.

The bottom line: Memorial Day is a pause, not a stop. The most prepared traders will return Tuesday with a clear plan, updated risk parameters, and a shortlist of names worth watching. Use the long weekend wisely.