Options FAQs

This list represents some of the most frequently asked questions relating to the Chicago Board Options Exchange and options trading in general.

General Questions

When did the CBOE open?

On April 26, 1973, the CBOE pioneered the concept of standardized, listed stock options to be traded on a centralized, regulated marketplace. Listing call options on just 16 stocks, CBOE traded 911 contracts on that first day of business. In 1977, put options were introduced.

How big is the trading floor, and what does it take to keep it operational?

The CBOE's 45,000 square-foot trading floor opened for trading in February of 1984. The exchange is cabled with more than 50,000 miles of electrical wire, most of it beneath the trading floor. There is enough phone cable to serve a city of 200,000 people; and more information display screens under one roof than any other building in the world. The concentration of technology requires as much electricity as the nearby 110-story Sears Tower.

Where can I learn more about what options are and how to trade them?

The Options Institute is the educational arm of the Chicago Board Options Exchange and they have an area here on this website entitled the Learning Center. You may visit http://www.cboe.com/LearnCenter/ to access free and fee based educational materials including Options Tutorials, Online Classes, Seminars and more.

What is the OCC?

The Options Clearing Corporation is the sole issuer of all securities options listed at the CBOE, four other U.S. stock exchanges and the National Association of Securities Dealers, Inc. (NASD), and is the entity through which all CBOE option transactions are ultimately cleared. As the issuer of all options, OCC essentially takes the opposite side of every option traded. Because OCC basically becomes the buyer for every seller and the seller for every buyer, it allows options traders to buy and sell in a secondary market without having to find the original opposite party.

The OCC substantially reduces the credit risk aspect of trading securities options as the OCC requires that every buyer and every seller have a clearing member and that both sides of the transaction are matched. It also has the authority to make margin calls on firms during the trading day. The OCC has a AAA credit rating from Standard & Poor's Corporation.

Are there requirements a company must satisfy before it is allowed to trade options on its own stock?

Among the requirements a company must satisfy is “distribution”. There must be a certain number of outstanding shares, and the shares must be owned by a minimum number of people. Otherwise, ownership of the stock is deemed “too highly concentrated”. The NYSE and NASDAQ also have listing requirements.

Although CBOE has staff that is constantly reviewing stocks that are candidates for listing, it is possible that a stock has been overlooked. If you feel this might be the case, you can suggest it. Just visit the Contact CBOE page and send your request to "New Option Listing Requests" within the "Product Listings & Trading Inquiries" drop-down menu.