By the standards established by the options exchanges, securities meeting the following criteria can list options:

• A national stock exchange in accordance with the National Market System (NMS) lists the underlying equity.
• The underlying has a minimum price of $3 per share for five consecutive trading days prior to listing.
• There are at least 7 million publicly held shares outstanding, excluding shares held by directors or holders of 10% or more of the underlying equity shares (e.g., the public float must be 7 million or more).
• There are at least 2,000 shareholders.

Generally, there would be a minimum of five trading days from the IPO date before listing options on any stock, but meeting these criteria alone would not guarantee listing.

Open interest only reflects the total number of open (long or short) option contracts for a given option series that have not yet been closed out. This indicates neither a bullish nor bearish outlook. For example, if there is no existing open interest and you buy one contract from another customer, and no more trading occurs, the open interest in that series is reported as one contract. That open interest reflects one call seller (bearish) and one call buyer (bullish).

As the above table illustrates, the open interest depends on whether the buyer and seller are opening or closing positions. OCC can only report new open interest after clearing and pairing opening and closing positions at the end of the day.

Liquidity can have many meanings. In the context of securities trading, liquidity is generally the term used to describe the ease of entering and or exiting a securities position at a fair price. A “liquid market” is evidenced by a tight (or small) spread between bid and offer, as well as large size bid and offer.

Liquidity can also refer to the availability of stock near the last sale price. When the bid-ask spread on an option is wider than typical, it usually means that the market makers are not sure where they can reliably buy or sell shares of the underlying stock to hedge possible options transactions. Sometimes that means that the stock is more volatile, but not always. It is possible to have a volatile stock that is liquid. This means that there are many stock shares to buy or sell at prices near the last sale. In that case, the options' bid-ask is likely narrow.

When the market on an option is narrow, it typically means that investors can buy or sell shares of the underlying stock in quantity near the last sale price, or that the option itself has a lot of buyers and sellers near the last sale price of the option. Usually if an option is liquid, the underlying stock is also liquid.

One method would be to enter the strikes into the Position Simulator to see how they might react. The investor could adjust for the passage of time, movement of the underlying, and even a change in volatility. Others might want to use a spreadsheet. The investor could put the strike prices across the top row, the current price of each option in the second row, and the range of potential stock prices at expiration in the leftmost column. Then plot a grid of percent return on each option at expiration given a range of prices for the stock. This should provide a good idea of the risk-reward ratio for the various strikes.

Open

An opening transaction is one that adds to or creates a new trading position. It can be either a purchase or a sale. With respect to an option transaction, consider both:

• An opening purchase is a transaction in which the purchaser's intention is to create or increase a long position in a given series of options.
• An opening sale is a transaction in which the seller's intention is to create or increase a short position in a given series of options.

Close

• A closing purchase is a transaction in which the purchaser's intention is to reduce or eliminate a short position in a given series of options. This transaction is frequently referred to as "covering" a short position.
• A closing sale is a transaction in which the seller's intention is to reduce or eliminate a long position in a given series of options.

This particular strategy may be a violation of the wash-sale rule. The wash-sale rule prevents taxpayers who are not broker-dealers from selling stock or securities (including options) at a loss and reacquiring substantially identical stock or securities (or options to acquire substantially identical stock or securities) within a 30-day period before or after the loss.

Contact your broker or tax advisor for guidance. For more information on wash-sale rules and other tax-related matters you may refer to our online Taxes & Investing - A Guide for the Individual Investor brochure (PDF).

positions after the close of the market each day. Therefore, if you bought back your short call, you no

longer have a short position at the end of the day and no possibility of assignment thereafter.

You may search by symbol or download a list all products here.

A common misconception is that volume and open interest equate with liquidity. While higher trade activity may create added liquidity through competition, each option has market makers and professional traders who take on the responsibility of making a market for all of the series that they represent. By asking your broker for a two-sided market with size, you can find out how many contracts are bid or offered at any time during the trading day. Don't let the open interest or volume fool you into thinking that there is or is not liquidity in that specific contract.

Unless the option is so out-of-the-money that nobody has any interest in a purchase or in very unusual market conditions, such as a trading halt in the underlying, there will normally be a market. For example, if an option has less than five trading days left and is 10 points out-of-the-money, you may not find anyone that would want to own that contract. Then, the market might be .00 bid - .20 ask.

When you look at open interest, which is simply the number of outstanding long (or short) contracts, you're seeing an indication of which options were previously the most active. If you feel it's important to trade only options with a high level of activity, you can find volume and open interest data under Market Data on our site.

OCC's Equity Special Settlement Report contains all equity option products that have non-standard terms of settlement and/or multiple components of delivery. The file contains one record per delivery component for every option contract considered to have special settlement terms. There is a key at the top of the headings. The file represents data on non-standard options that were eligible to be cleared the previous day. It will not represent options that became non-standard on the effective date.

To read about how that adjustment came about, you can access the Information Memos section of the OCC's website.

For files of data you will need to contact a data vendor. You can find a list of vendors on the OPRA site here.

Your broker may be able to obtain some prices for you. Each exchange will provide a limited amount of data from their exchange for free. For larger amounts of data they will charge a fee.

You will want to contact your broker or tax advisor for guidance. For more information on tax-related matters, you may refer to our onlineTaxes & Investing - A Guide for the Individual Investor brochure (PDF).

The Options Expiration Calendar is available through OCC’s website where you may view or print a copy: Options Expiration Calendar. You may also obtain one by submitting a request via email: investorservices@theocc.com.

Please be advised that OCC does not assume any responsibility as tax professionals. A CPA or your brokerage firm can best answer all tax-related questions. For your specific scenario, our Taxes and Investing Guide states: "Premium received from writing a call is not included in income at the time of receipt, but it is held in suspense until the writer's obligation to deliver the underlying stock expires. If the writer's obligation expires, the premium is short-term capital gain to the writer upon expiration regardless of the length of time the call is outstanding."

View Taxes & Investing - A Guide for the Individual Investor brochure for

more information.

Probably, depending on your brokerage firm’s policies and procedures regarding trading in retirement accounts. Find a firm that offers you the flexibility you desire. Read the CBOE White Paper (PDF) on the subject.

Access put/call ratios for any individual equity by entering the underlying symbol on the OCC’s Volume Query tool or perform searches in the Put/Call Ratio page of OCC's Market Data section.

Access this data by day, week, month or year. Please note that all values stated in these reports represent contract sides (one side long, one side short).

Position limits are the amount of contracts that any controlling entity's account may have open positions in, on the same side of the market. For example, long calls and short puts are considered to be on the same side of the market. Although most public investors will never come close to the position limits for any option class, OCC offers a current list (represented in shares) of the limits.

In addition, each options exchange has its own position limit rule. You can find these rules by visiting their respective websites.

As of July 31, 2013, the top option volume day was August 8, 2011 when 41,859,875 options traded.​

Employee stock options differ in three main ways from what many refer to as standardized (or ordinary) options:

• Exchanges do not trade employee stock options. In contrast, standardized options are traded on exchanges.
• Employee stock options are not standardized as they have unique expiration dates and restrictions specific to the employee’s company and compensation program; whereas exchange-traded options have standardized terms, normally representing 100 shares of the underlying equity, with routine expiration dates.
• Employee stock options generally are not transferable. Standardized options are fungible and can be bought and sold during exchange trading hours on any exchange that lists them.

Options on equities, narrow-based (sector) indexes and narrow-based ETFs, generally open at 9:30 a.m. ET and close for trading at 4:00 p.m. ET. Options on some broad-based ETFs and index products trade until 4:15 p.m. ET. Please consult the product specifications at the exchange where the product trades for exact trading hours.​

Trading hours for ETFs vary. Generally, ETFs based on broad-based indexes trade until 4:15 p.m. ET.

The general rule for options on ETFs is that they are open for trading whenever shares of the underlying ETF are open in the primary market.

http://www.theocc.com/clearing/clearing-services/specifications-quarterly-options.jsp

Quarterly options (Quarterlys) are options that expire at the close of business on the last business day of a calendar quarter (March/June/September/December). The last business day of a calendar quarter is also the last trading day for quarterly options. Visit the exchange website where the option trades to learn more.

In early 2007, the option exchanges began a pilot program to trade options in $.01 increments. The pilot included 13 stocks and exchange-traded funds (ETFs). The $0.01 increments were available for options with a quoted price of less than $3. Options with a quoted price above $3 were available in nickel ($0.05) increments. All IWM, SPY and QQQ options, however, were quoted in $.01 increments.

Since its initial rollout, the penny pilot program has been expanded to include well over 350 securities. Please note that all of the exchanges have the ability to provide executions in penny increments.

The six inputs that determine an option's value are stock price, strike price, time to expiration, interest rate, dividend yield and volatility (over the life of the option). Normally, if the stock price goes up and the other factors remain the same, then a call option goes higher. Therefore, if the call option has gone down, then one of the other factors must have changed.

The passage of time can certainly push an option's value lower. A dividend payment may also have an impact. The real wild card is implied volatility. Sometimes, the market bids up the implied volatility in anticipation of a market-moving event such as earnings release or a major speech by an important person. After the event, the implied volatility often drops sharply, especially if the event failed to have the expected impact

When you open a short option position, your account will be credited the premium of the option less commissions. However, to account for the position, brokerage firms generally show the short option as a negative in the account, essentially subtracting the market value of the call from the account net worth.

Consider buying stock: you do not immediately make the amount of the purchase. Rather there is a debit in the account equal to the cost of the stock plus commissions. If you started with $5,000 and purchased $5,000 worth of stock, there is a credit for the stock and a debit for the cost. The account value is still $5,000 (assuming the stock price does not change).

When shorting options (like a covered call), you are credited the proceeds and debited the option value. If the option eventually goes worthless, this debit would become zero. If you did not subtract the short option from the value of the account, the value would appear inflated. To prevent this, subtract the market value of the short option from the account net worth. The proceeds from the option are generally available to use for other investments or to remove from the account.

Discuss this further with your broker as we can only generalize how they may be accounting for your positions.

The options exchanges utilize a $0.50 strike program that allows the exchanges to list $0.50 strikes, beginning at $0.50 and up through and including $5.50, on up to 20 equity option classes whose underlying security closed at or below $5.00.

To be eligible, an underlying stock must close at or below $5.00 in its primary market on the previous trading day and have a national average daily volume that equals or exceeds 1,000 contracts per day as determined by OCC during the preceding three calendar months. After adding an option class to the $0.50 strike program, the exchanges can list $0.50 strike prices of $0.50, $1, $1.50, $2, $2.50, $3 and $3.50, $4, $4.50, $5, and $5.50.

This program has been expanded to include some short-term options.

In the last quarter of 2012, the options exchanges received regulatory approval for extended weekly expirations. The options exchanges can now list up to five consecutive weekly expirations for selected securities. Although any product with weekly expirations can be part of the extended weekly program, the exchanges will typically select the most actively traded options.

If the regular monthly expiration is three weeks away, then investors would most likely see weekly, weekly, monthly, weekly and weekly expirations listed over a five-week period. Therefore, no new weeklys are listed that would expire during the expiration week for regular options, which is typically the third Friday of each month, nor would they be listed if they would expire on the same date as a quarterly option on the same underlying.

An option holder may exercise an American-style option any time before expiration. An option holder may exercise a European-style option only during a specified period before expiration. Currently, every European-style option is exercisable only on its expiration date.

All exchange-traded equity options are American-style. Most index options are European-style. Check each index option’s product specifications to verify the options exercise style.

Please visit OCC's Series and Trading Data for a list of options that are currently available.

All standardized equity options use American-style exercise. American-style exercise means that you can exercise your contract any day that the market is open before the expiration date. The last day to exercise a monthly American-style option is usually the third Friday of the month in which the contract expires (expiration Friday).

Most, but not all, index options use European-style exercise. This means that the only time you can exercise your contract is the last trading day (usually Friday) before expiration. Even though there is only one day to exercise your contract, you can always close out your option position in the market on any day prior to expiration.

Options typically do not move as much as their underlying stock unless they are deep-in-the-money and/or very close to expiration. There are valid mathematical reasons for this.

Delta is the amount you can expect an option premium to change given a one-point move in the underlying stock (all other conditions being equal). We derive Delta from the Black-Scholes formula for pricing options. It represents roughly how much the option behaves like the underlying stock. A Delta of .50, for example, means that an option can be expected (all other things being equal) to move about $0.50 for every one-point move in the underlying product. Delta changes with time to expiration as the option moves more in- or out-of-the-money. Volatility of the underlying stock also affects Delta.

In general, call option premiums rise when interest rates rise. That is because options are priced on a risk-neutral basis (i.e., on a Delta-neutral or fully-hedged basis). Therefore, a long call is hedged with short stock, and a short stock position generates interest revenue. That makes the call option worth more. If interest rates go up, the interest revenue from the short stock position increases, which makes the call worth still more. Note that for put options, it works the opposite way. Dividends also work in the opposite direction.

A stock's value is equal (theoretically) to the present value of all its future dividends, so an increase in the interest rate used to discount the future dividends reduces the value of the stock. When someone says higher interest rates make call options worth more, there is an implicit assumption all other things are equal. However, in reality, all other things are rarely equal, and the decline in a stock's price due to an interest rate increase often overwhelms the effect of the higher interest rate on the option itself.