Dawn Pennington

Understanding Options Expiration

by Dawn Pennington   08/27/08

When it comes to options, sometimes it pays to "roll" with the punches.

In options trading, "rolling" means replacing an existing options position with a new one that has the same strike price, but an earlier or later expiration date. Or, you can stay with the expiration month but roll up or down to a different strike price to accommodate the underlying stock's movement.

But after deciding to roll a position, new traders are sometimes surprised to find that stocks don't always have options available for all coming months. But what may be particularly puzzling was that, if they were following certain stocks/options for the past year, they would know that there were options that expired in each month of the last calendar year.

So, how can there have been options available in each month that has passed but not in each month that hasn't happened yet?

For example, perhaps you want to roll your existing Research In Motion (RIMM) September 100 Calls into the RIMM February 100 Calls.

But on the particular day that you want to make this trade, you find that, while you can purchase options for December and January, there are no ...