Option Series

Accumulation/Distribution Indicator - A/D Definition and Uses

What is a range of options?

A series of options refers to a grouping of options listed on the same underlying security with various exercise prices specified, but for the same expiration month. These can be buy and sell options. A series of options therefore lists the available calls and options that will expire at the same time for a given underlying security, and may also include quotation information such as the price and volume of each.

Functioning of the series of options

A series of options displays all the calls or options available on an underlying security, with different strike prices, for the same expiration month. If, for example, XYZ corporation shares have options and XYZ is trading for $ 100 per share, the June series of options may look like:

  • Call of June 80 | June 80 Put
  • June 85 Appeal | June 85 Put
  • Call of June 90 | June 90 Put
  • Call of June 95 | June 95 Put
  • Call of June 97.5 | June 97.5 Put
  • June 100 Appeal | 100 June Put
  • 102.5 June Call | June 102.5 Put
  • Call of June 105 | 105 June Put
  • Call of June 110 | June 110 Put
  • June 115 Appeal | 115 June Put
  • Call of June 120 | June 120 Put
  • June 130 Appeal | 130 June Put

In some option series, calls and put options are listed side by side. In other cases, only the call series or sales series are listed.

Key points to remember

  • A series of options displays all the calls or options available on an underlying security, with different strike prices, for the same expiration month.
  • Option series may also include pricing information, such as the latest price, bid and offer, and the volume of each option in the series.
  • Option series are linked to expiration cycles, which affect the expiration months of the option series.

Option cycles

An option will be listed with a specified strike price. For example, XYZ may have a call option with an exercise price of $ 110. When the option is listed, it can be assigned to one of three cycles:

Cycle one: JAJO – January, April, July and October

Cycle two: FMAN – February, May, August and November

Cycle three: MJSD – March, June, September and December

Options traded on the stock exchange follow their designated cycle with lists available for the first two months followed by the following two months. If the call XYX 110 $ is a cycle three, then in January, it will have the following lists: XYZ 110 January, XYZ 110 February, XYZ 110 March, XYZ 110 June. Each entry would be considered a series of individual options, the four option offers together representing the option cycle. Most lists of exchange traded option series will expire on the third Friday of their expiration month.

Option classes

An investor will find several lists of option series in a designated option class. An option class refers to the designation of the option as a call or put. Generally, most option exchanges list options by class. Therefore, an investor looking to buy call options on an underlying security would see a long list of lists of call option series, each with its own strike price and maturity. Likewise, an investor looking for put options on an underlying security will first turn to the put option category for all series registrations at different exercise prices and expirations.

Settlement of options

Publicly traded option exchanges list option classes consistently with many different strike prices and expirations, all in the designated option cycle. The value of each option will vary depending on the price of the underlying option.

Options trading on regulated exchanges is supported by regulators who guarantee options in the event of default. Thus, investors in options do not have to worry about the risk of replacement by options listed on the stock exchange, because the regulators will intervene to cover the counterparty positions in the event of a potential default by the counterparty.

Leave a Comment

Your email address will not be published. Required fields are marked *