- Criterias to list stock options
- If you already own stock in a private or pre-IPO company
- How to BUY a PUT Option - [Option Trading Basics]
- You May Also Like
- Continue Reading...
- Buying Straddles into Earnings
- Writing Puts to Purchase Stocks
- What are Binary Options and How to Trade Them?
- Investing in Growth Stocks using LEAPSÂ® options
- Effect of Dividends on Option Pricing
- Bull Call Spread: An Alternative to the Covered Call
- Dividend Capture using Covered Calls
- Leverage using Calls, Not Margin Calls
- Day Trading using Options
- What is the Put Call Ratio and How to Use It
- Understanding Put-Call Parity
- Understanding the Greeks
- Valuing Common Stock using Discounted Cash Flow Analysis
Home / Options FAQ
Criterias to list stock options
Q: Why do some stocks have options for trading while others don't?
A: To have options on their stock traded on options exchanges, companies must meet the following criterias.
- The company must have a mimimum of 7,000,000 publicly held shares outstanding.
If you already own stock in a private or pre-IPO company
- The stock must be listed on the NYSE, Nasdaq, AMEX or any national stock exchange..
- For the past 5 trading days, the closing price of the stock must have a minimum per share price for a majority of trading days.
This means that IPO issues cannot have options traded on them until 5 days after the initial public offering date.
- There must be at least 2,000 shareholders in the company.
Option exchanges will not allow any option to be traded for a particular stock if the company fail to meet any of the above criteria.
More Frequently Asked Questions
- What are the differences between standardized options and employee stock options?
- I recently bought a call option. Since then, the stock price has risen and so has the call option. I wish to sell my call option for a profit but am I obligated to deliver the underlying stock if the option buyer decides to exercise his call option?
- Does an increase in open interest imply a bullish sentiment?
- I own options on a stock that has just declared a 2 for 1 stock split.
How to BUY a PUT Option - [Option Trading Basics]
What happens to my options?
- What's the difference between options and futures?
- Can i be assigned if I buy-to-close a short position?
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Buying Straddles into Earnings
Buying straddles is a great way to play earnings.
Many a times, stock price gap up or down following the quarterly earnings report but often, the direction of the movement can be unpredictable. For instance, a sell off can occur even though the earnings report is good if investors had expected great results....[Read on...]
Writing Puts to Purchase Stocks
If you are very bullish on a particular stock for the long term and is looking to purchase the stock but feels that it is slightly overvalued at the moment, then you may want to consider writing put options on the stock as a means to acquire it at a discount....[Read on...]
What are Binary Options and How to Trade Them?
Also known as digital options, binary options belong to a special class of exotic options in which the option trader speculate purely on the direction of the underlying within a relatively short period of time.....[Read on...]
Investing in Growth Stocks using LEAPSÂ® options
If you are investing the Peter Lynch style, trying to predict the next multi-bagger, then you would want to find out more about LEAPSÂ® and why I consider them to be a great option for investing in the next MicrosoftÂ®....
Effect of Dividends on Option Pricing
Cash dividends issued by stocks have big impact on their option prices.
This is because the underlying stock price is expected to drop by the dividend amount on the ex-dividend date....[Read on...]
Bull Call Spread: An Alternative to the Covered Call
As an alternative to writing covered calls, one can enter a bull call spread for a similar profit potential but with significantly less capital requirement.
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Dividend Capture using Covered Calls
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Leverage using Calls, Not Margin Calls
To achieve higher returns in the stock market, besides doing more homework on the companies you wish to buy, it is often necessary to take on higher risk.
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Understanding Put-Call Parity
Put-call parity is an important principle in options pricing first identified by Hans Stoll in his paper, The Relation Between Put and Call Prices, in 1969. It states that the premium of a call option implies a certain fair price for the corresponding put option having the same strike price and expiration date, and vice versa.... [Read on...]
Understanding the Greeks
In options trading, you may notice the use of certain greek alphabets like delta or gamma when describing risks associated with various positions.
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Since the value of stock options depends on the price of the underlying stock, it is useful to calculate the fair value of the stock by using a technique known as discounted cash flow....