Education


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

 

Placing Your Options Order and Quote/Price Reporting

Can I place my order directly with the CBOE?

No. All orders must be entered via a broker dealer or online trading network.

What happens to my order after I enter it with my broker?

Your order may take many routes depending on your broker and the firm that represents them on the floor. Most likely it will be routed electronically to CBOE's Order Routing System (ORS). ORS is a network of communication lines from retail member firms computers that collect and route wire orders of up to 2,000 contracts to one of three trading floor locations: booth, crowd or CBOE's Order Book Official, based on price and volume parameters set by each member firm and CBOE. It is the access system to the Electronic Book (EB), Retail Automatic Execution System (RAES), and Floor Broker Routing (FBR).

What is Time and Sales?

Time and Sales is CBOE's audit trail of last sales and quotes. It lists this information by time.

Why are there such widely varying prices on the same option between different exchanges?

When you visit our website quote page at the following URL: http://www.cboe.com/DelayedQuote/QuoteTable.aspx, you will see different columns in the table after you enter your stock symbol.

The first column is "Last Sale." This column generates a great deal of confusion for investors new to options. Last Sale is simply the last price at which this particular option traded. For example, XYZ's Jan 2003 120 puts have last sale prices from the different exchanges as follows: CBOE 41, AMEX 55, Philly 36.80. These prices occurred at different times at each exchange. These times could be up to a week or more apart.

The next column is the net change. This is self-explanatory.

The third and fourth columns represent the bid and the ask. The "bid" is the price where the buyers are willing to buy the option and the "ask" is price where the sellers want to sell the option. A person who is looking to buy or sell an option contract, should be looking at these prices and not the last price of which the contract traded at.

The final two columns are volume and open interest. Volume is simply the number of contracts traded for the day, and open interest is the number of outstanding contracts.

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Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (ODD). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. The information on this website is provided solely for general education and information purposes and therefore should not be considered complete, precise, or current. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in the website information. No statement within the website should be construed as a recommendation to buy or sell a security or to provide investment advice. The inclusion of non-CBOE advertisements on the website should not be construed as an endorsement or an indication of the value of any product, service, or website. The Terms and Conditions govern use of this website and use of this website will be deemed acceptance of those Terms and Conditions.