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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.

1. The company must have a mimimum of 7,000,000 publicly held shares outstanding.
2. The stock must be listed on the NYSE, Nasdaq, AMEX or any national stock exchange..
3. 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.
4. 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

1. What are the differences between standardized options and employee stock options?
2. 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?
3. Does an increase in open interest imply a bullish sentiment?
4. I own options on a stock that has just declared a 2 for 1 stock split. What happens to my options?
5. What's the difference between options and futures?
6. Can i be assigned if I buy-to-close a short position?