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A stock option is on a February, May, August, and November cycle. What options trade on
Chapter 10, Problem 10.5(choose chapter or problem)
A stock option is on a February, May, August, and November cycle. What options trade on (a) April 1 and (b) May 30?
Questions & Answers
QUESTION:
A stock option is on a February, May, August, and November cycle. What options trade on (a) April 1 and (b) May 30?
ANSWER:Step 1 of 3
Stock options: It is a process where selling is done from one party to another party that provides right to the buyer but not the compulsion to sell (put) or to buy (call) a stock at some settled price on a specified date within a certain time period.
Trade cycle of options: United States stock options are generally based on January February or March cycle. The January cycle consist the months January, April, July, and October, and the February cycle consist the months February, May, August, and November. Last the March cycle which consists of March, June, September and December.
If the expiration date in the current month is yet to come, then the options trade with the expiration dates of the current month, the month following the current month and the next two months as falling in the cycle.
If the expiration date of the current month has already passed, then the options trade with the expiration dates of the next month of the current expiration month, next-to-next month of the current expiration date, and the next two months following the cycle.