Option Cycles

I felt inclined to generate a quick post to satisfy the masses. I am abnormally busy today, so hopefully this small post will add a little value. The intention here is to explain why option chains display some months of expiration available for trading while others are not. Options are issued in cycles, which is basically a specific quarterly pattern of expiration dates tailored to each individual stock. The main cycles are…

JAJO- January, April, July, October
MJSD- March, June, September, and December
FMAN- February, May, August, November

In 1973 when options first started trading, the CBOE decided there would only be four months in which options could be traded at any given time. This is where the cycles originated. Since then they have been modified to allow every individual stock to trade current and next month expiration dates. This means that regardless of which four-cycle months are available, you will always have options available for the current calendar month you are in, and the following month. The addition of LEAPS has also changed the cycle to include more than just four months of available option expirations. Knowing this cycle will help to know what is available, and what will become available to make a decision on how much time to purchase.

Many of you figured this out already...but I needed an easy topic to write about. If I get the time, perhaps we can get into a spread trade together or something? Any "sure-things" out there? By the way, what an amazing rally out of the market today. Does this leave you cliff-hanging on what will happen tomorrow?

See you in a few...

How about a Bull Put Spread on Google (370 / 360)which is currently paying $1.30. The only unknown is earnings release ? Last one was July 20, so the next ER might be October 20 (Option Friday) ?

Anyway, Google has a very strong support at $370 and even with Yahoo's news yesterday, Google managed to pull back up and Not close at the low.

Any thoughts ?

-Mark M.

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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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