Where are Options Traded?
Option contracts are traded either;
- on a public stock exchange (also known as ETO's (Exchange Traded Options))
- implicity agreed between two parties (also known as OTC's (Over The Counter options)).
The majority of options, however, are traded via public exchange houses and these will be the options discussed throughout this web site. The OTC market is a complicated one, where traders from large institutions can create and trade non-standard option derivatives. They can, for example, add their own special rules such as: if the underlying stock trades as high as x then the contract terminates and the option is then worthless. This is known as a Knockout Option or a Barrier Up and Out Option.
Options are listed and standardized by the stock exchange and are traded by what is known as Serial Months. By standardized, I mean that the specifications that make up the option contracts are set by the stock exchange and cannot be changed.
Here is a snapshot of the August 2005 options for IBM.
The Call options are on the left, while the Put options are listed on the right. Notice the strike prices down the middle? In this case there are 24 contracts available for the public to trade that expire in August 2005. The total number of listed options for IBM at the time of writing (3rd July 2005) are 230. That's 115 call options and 115 put options.
17 Comments
Joe April 29th, 2009 at 6:21am
Hi Peter, I understood with your clear explanation,
Thanks and appreciate it :)
Peter April 27th, 2009 at 5:21am
Hi Joe, no problem about the question.
You cannot see the total number of options traded across all expirations in the screen shot above...you can only see the August 2005 options.
In August you can see that there are 12 strikes, which means 24 contracts (12 call options and 12 put options).
There are also options in the other expiration months, Jul 05, Oct 05, Jan 06, Jan 07 and Jan 08. In total there were 230 contracts (115 strikes).
The link below shows the current options on IBM.
joe April 26th, 2009 at 10:52pm
Hi, I am sorry if I ask the same question that Sien asked before.
I don't see there are 230 options as well. Can you guide me? the answer from Admin also doesnt help me. thanks heap
Admin March 23rd, 2009 at 5:46am
Hi Sien,
You can see the current list of options for IBM here:
https://finance.yahoo.com/q/op?s=IBM
Sien March 23rd, 2009 at 4:07am
Hi, how can I see there are 230 options from the snapshot? Thanks
Admin February 3rd, 2009 at 4:10pm
Hi Ivey, from the IBM screen shot above. There are 12 calls and 12 puts in August for a total of 24 contracts.
A Ivey February 3rd, 2009 at 6:52am
Where did you get the number 24 for public options available to trade from?
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