Optionable Stock
阅读 587 · 更新时间 December 5, 2024
An optionable stock is one where the shares have the necessary liquidity and volume such that an exchange lists that stock's options for trading. In order for a stock to be optionable, exchanges mandate that certain criteria be met, including a minimum share price, number of shares outstanding, and minimum unique shareholders, among others.
Definition
Optionable stock refers to stocks that have sufficient liquidity and trading volume, allowing exchanges to list options on them. This means investors can trade these stocks through the options market. To qualify as optionable, exchanges typically require stocks to meet certain criteria, such as minimum stock price, number of shares outstanding, and minimum number of independent shareholders.
Origin
The concept of optionable stocks emerged with the development of the options market. The options market began to rise in the United States in the 1970s, with the Chicago Board Options Exchange (CBOE) launching standardized stock options trading in 1973, marking the formal introduction of optionable stocks. As global financial markets evolved, more exchanges began to introduce stock options trading.
Categories and Features
Optionable stocks are generally categorized into two types: high liquidity stocks and low liquidity stocks. High liquidity stocks are typically those of large companies, with high trading volumes and narrow bid-ask spreads, suitable for frequent trading. Low liquidity stocks may belong to smaller companies, with lower trading volumes and wider bid-ask spreads, suitable for long-term investment. The main features of optionable stocks include high liquidity, lower transaction costs, and higher market attention.
Case Studies
A typical example is Apple Inc., whose stock has long been optionable. Due to Apple's market position and high trading volume, its stock options are listed on multiple exchanges worldwide, allowing investors to employ various strategies through the options market. Another example is Tesla Inc., which became optionable shortly after its IPO in 2010, especially during periods of significant stock price volatility, leading to a notable increase in options trading volume.
Common Issues
Common issues investors face when trading optionable stocks include complex options pricing, high market volatility, and liquidity risk. Options pricing involves multiple factors such as the underlying stock price, volatility, and time value, which can be challenging for beginners to grasp. Additionally, market volatility can lead to significant changes in options prices, increasing investment risk. Liquidity risk may also arise during inactive market periods, making buying and selling difficult.
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