The Options Market Place - The Options Markets
Standardized options trade on exchanges through a dual auction process similar to that for listed stocks. All standardized options are known as listed options. However, large institutions may trade specialized options OTC. The terms and conditions of the contract may be negotiated with the OTC option dealer. Listed options trade on the following exchanges:If any option fails to meet the exchange’s listing requirements, no new option series for that underlying security will be opened for trading by the exchange unless the option receives an exception from the exchange. If no exception is received, existing option series for the underlying security will continue to trade until the last series of options expires.
- NYSE Amex
- NYSE ARCA
- NASDAQ / OMX PHLX
A customer must be notified prior to executing a transaction in an existing series of options that will be delisted.
The option exchanges have also set maximum limits on the spread between the bid and ask for option contracts that trade on their floors. The maximum spread depends on the price of the option contract and are currently set as follows for options with the bid prices of:
- Less than $2, a maximum spread of 25 cents
- Greater or equal to $2 but less than $5, a maximum spread of 40 cents
- Greater or equal to $5 but less than $10, a maximum spread of 50 cents
- Greater or equal to $10 but less than $20, a maximum spread of 80 cents
- Greater than $20, a maximum spread of $1