What is an 'Option Series'

An option series refers to an option on an underlying security with a specified strike price and expiration date.

BREAKING DOWN 'Option Series'

An option series is an individual listing with a single strike price and expiration. When an option is listed on an exchange it is randomly assigned one of three cycles. An option series can sometimes be a reference to the listing of an exchange traded option with four possible expiration dates. Generally, however each option in the cycle is typically considered its own individual option series.

Option Cycles

An option will be listed with a specified strike price. For example, XYZ Company may have a call option with a strike price of $110. When the option is listed it can be assigned one of three cycles:

Cycle one: JAJO - January, April, July and October

Cycle two: FMAN - February, May, August and November

Cycle three: MJSD - March, June, September and December

Exchange traded options follow their designated cycle with listings available for the first two months followed by the next two cycle months. If the XYX $110 call is a cycle three then in January it would have the following listings: XYZ 110 Jan, XYZ 110 Feb, XYZ 110 March, XYZ 110 June. Each listing would be considered an individual option series with the four option offerings together representing the option cycle. Most all exchange traded option series listings will expire on the third Friday of their listed expiration month.

Option Classes

An investor will find multiple option series listings within a designated option class. An option class refers to the option’s designation as either a call or a put. Generally, most option exchanges will list options by class. Therefore, an investor seeking to buy call options on an underlying security would see a long list of call option series listings, each with their own individual strike price and expiration. Similarly, an investor seeking put options on an underlying security would first look to the put option class for all of the series listings at different strike prices and expirations.

Option Regulation

Publicly traded option exchanges list option classes uniformly with many different strike prices and expirations all within an option’s designated cycle. The value of each option will vary based on the price of the underlying option.

Options trading on regulated exchanges are supported by regulators who ensure options in the case of default. Thus, option investors need not worry about replacement risk with publicly traded options since the regulators will step in to cover counterparty positions in the event of any potential counterparty default.

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